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Bank-fintech investments and bank performance: A method of moments quantile regression analysis

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  • Alfhaili, Faisal Abdulmohsen

Abstract

Using the Method of Moments Quantile Regression (MMQR), this study examines the impact of bank–fintech equity investments on bank profitability, stability, and efficiency. Analyzing U.S. banks’ participation in fintech funding rounds from 2005 to 2023, we uncover heterogeneous effects across the distribution of bank performance and part of this heterogeneity may reflect regulatory structure rather than fintech investment alone. Through this unique setup, we find that fintech investments yield the strongest positive profitability effects for banks in the lower quantiles, but turn negative for the highest-profit banks. In terms of stability, fintech investments increase non-performing loans (NPL) for healthier banks, while being associated with a significant reduction in NPL levels for riskier banks. Regarding efficiency, fintech investments show no significant impact on the most operationally efficient banks, but they start to exhibit a gradual, significant positive effect on banks in the middle and higher quantiles, which are the least efficient. The findings of this study are robust to a battery of robustness check analyses.

Suggested Citation

  • Alfhaili, Faisal Abdulmohsen, 2026. "Bank-fintech investments and bank performance: A method of moments quantile regression analysis," Finance Research Letters, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finlet:v:102:y:2026:i:c:s1544612326006239
    DOI: 10.1016/j.frl.2026.110094
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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