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Does product market competition affect the adoption of FinTech by non-financial firms?

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  • Hong, Liu
  • Nikbakht, Ehsan
  • Zhou, Tianpeng

Abstract

In this paper, we construct a new measure of FinTech adoption based on textual analysis and examine how product market competition affects FinTech adoption at the firm level. We document that firms operating in more competitive environments have a higher incentive to adopt FinTech, especially when they produce similar products as their competitors. We also find that the positive relation between competition and FinTech adoption is less pronounced for financially constrained firms, suggesting that firms’ ability to adopt FinTech is restricted by their access to external financing.

Suggested Citation

  • Hong, Liu & Nikbakht, Ehsan & Zhou, Tianpeng, 2023. "Does product market competition affect the adoption of FinTech by non-financial firms?," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s154461232300096x
    DOI: 10.1016/j.frl.2023.103730
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    2. Chang, Vincent Y.L., 2023. "Do InsurTech startups disrupt the insurance industry?," Finance Research Letters, Elsevier, vol. 57(C).

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    More about this item

    Keywords

    FinTech adoption; Competition; Product similarity; Financial constraints;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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