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Funding for fintechs: patterns and drivers

Author

Listed:
  • Giulio Cornelli
  • Sebastian Doerr
  • Lavinia Franco
  • Jon Frost

Abstract

This special feature examines trends in equity funding for financial technology firms (fintechs) and the underlying country-specific drivers. Fintechs have raised over $1 trillion in equity globally since 2010. While the investment landscape was initially quite concentrated, it has become more diverse, both geographically and across market segments. Equity funding for fintechs is higher in countries with more innovation capacity and better regulatory quality. It also increases after the introduction of regulatory sandboxes. Early-stage venture capital investment is higher after merger and acquisition activity by large banks, but not after that by big techs.

Suggested Citation

  • Giulio Cornelli & Sebastian Doerr & Lavinia Franco & Jon Frost, 2021. "Funding for fintechs: patterns and drivers," BIS Quarterly Review, Bank for International Settlements, September.
  • Handle: RePEc:bis:bisqtr:2109c
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    References listed on IDEAS

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    3. Gordon M. Phillips & Alexei Zhdanov, 2013. "R&D and the Incentives from Merger and Acquisition Activity," Review of Financial Studies, Society for Financial Studies, vol. 26(1), pages 34-78.
    4. Giulio Cornelli & Jon Frost & Leonardo Gambacorta & Raghavendra Rau & Robert Wardrop & Tania Ziegler, 2020. "Fintech and big tech credit: a new database," BIS Working Papers 887, Bank for International Settlements.
    5. Stijn Claessens & Jon Frost & Grant Turner & Feng Zhu, 2018. "Fintech credit markets around the world: size, drivers and policy issues," BIS Quarterly Review, Bank for International Settlements, September.
    6. repec:cup:jfinqa:v:46:y:2011:i:06:p:1545-1580_00 is not listed on IDEAS
    7. Giulio Cornelli & Sebastian Doerr & Leonardo Gambacorta & Ouarda Merrouche, 2020. "Inside the regulatory sandbox: effects on fintech funding," BIS Working Papers 901, Bank for International Settlements.
    8. Philip McCann & Raquel Ortega-Argilés, 2013. "Modern regional innovation policy," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 187-216.
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    11. Colleen Cunningham & Florian Ederer & Song Ma, 2021. "Killer Acquisitions," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 649-702.
    12. Asli Demirgüç-Kunt & Ross Levine (ed.), 2018. "Finance and Growth," Books, Edward Elgar Publishing, number 17120.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bellardini, Luca & Del Gaudio, Belinda Laura & Previtali, Daniele & Verdoliva, Vincenzo, 2022. "How do banks invest in fintechs? Evidence from advanced economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    2. Daniele Schilirò, 2021. "Fintech in Dubai: Development and Ecosystem," International Business Research, Canadian Center of Science and Education, vol. 14(11), pages 1-61, November.
    3. Sebastian Doerr & Jon Frost & Leonardo Gambacorta & Vatsala Shreeti, 2023. "Big techs in finance," BIS Working Papers 1129, Bank for International Settlements.
    4. Mertzanis, Charilaos, 2023. "FinTech finance and social-environmental performance around the world," Finance Research Letters, Elsevier, vol. 56(C).

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    More about this item

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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