The Impact of Fintech Startups on Financial Institutions' Performance and Default Risk

Abstract

We examine the impact of fintech start-ups on the performance and default risk of traditional financial institutions. We find a positive relationship between fintech start-up formations and incumbent institutions' performance for the period 2005-2018 and a large sample of financial institutions from 87 countries. We further analyze the link between fintech start-up formations and the default risk of traditional financial institutions. Fintech start-up formations decrease stock return volatility of incumbent institutions and decrease the systemic risk exposure of financial institutions. The findings indicate that legislators and financial supervisory authorities should closely monitor the development of fintech start-ups, because fintechs not only have a positive effect on the financial sector's performance but also can improve financial stability relative to the status quo.

Enhancing financial performance by applying knowledge management and new financial technologies in the banking industry

“…Accordingly one would state that providing support from the bank's senior managers in applying these technologies, as well as appropriate investment to use new financial technologies, is likely to have a positive effect on the growth in sales volume of banking services, increasing the market share, and sustainable profitability as well. The findings show the results from H3 are consistent with those of Cho &Chen (2021) andHornuf &Haddad (2021).…”

Revitalisasi Industri Keuangan: Tinjauan atas Perkembangan Terkini Fintech di Jawa Barat

“…Koeksistensi perusahaan rintisan tekfin dan lembaga keuangan tradisional di Jawa Barat dan wilayah lain memang telah menjadi topik yang menarik. Perusahaan rintisan tekfin dapat melengkapi layanan perbankan tradisional dan meningkatkan inklusi keuangan, sekaligus memberikan tekanan kompetitif pada bank-bank yang sudah mapan (Haddad & Hornuf, 2021). Persaingan ini dapat mendorong inovasi, meningkatkan layanan pelanggan, dan pada akhirnya menguntungkan konsumen (Chueca Vergara & Ferruz Agudo, 2021).…”

“…Perusahaan rintisan tekfin menantang lembaga keuangan tradisional dengan menyediakan akses yang lebih murah, lebih cepat, dan lebih mudah ke layanan keuangan, mendorong kegiatan transformasi dan inovasi di industri ini (Haddad & Hornuf, 2021). Sebuah studi yang meneliti dampak startup tekfin terhadap kinerja dan risiko gagal bayar lembaga keuangan tradisional menemukan adanya hubungan positif antara pembentukan startup tekfin dan kinerja lembagalembaga yang sudah ada (Haddad & Hornuf, 2021). Perusahaan rintisan tekfin juga dapat menurunkan volatilitas return saham lembaga-lembaga yang sudah ada dan mengurangi eksposur risiko sistemik lembaga keuangan, sehingga dapat meningkatkan stabilitas keuangan (Haddad & Hornuf, 2021).…”

The Impact of Fintech on Financial Institutions: The Case of Georgia

“…The report of Haddad and Hornuf (2021) detected the positive impact on financial institutions' performance because the establishing of fintech companies improves the performance of financial institutions; banks are forced to rethink and redesign their business model while the competition increases.…”