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Impacts of FinTech funding announcements on traditional banks: An event study analysis

Author

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  • Del Sarto, Nicola
  • Ramirez, Irene Comeig
  • Gai, Lorenzo

Abstract

This paper investigates how traditional banks' stock prices react to FinTech funding announcements, addressing a notable research gap. Using event study methodology with the MSCI index as a benchmark, we analyze stock price responses of European traditional banks from 2010 to 2019. Both parametric t-tests and non-parametric generalized sign tests are employed to assess the impact. Grounded in signaling theory, we hypothesize that FinTech funding events signal increased competition and strategic uncertainty, affecting investor perceptions of traditional banks. Our findings indicate that FinTech funding announcements significantly influence traditional bank stock prices, with digital lending FinTechs having a more substantial impact compared to digital capital raising and digital payment FinTechs. This study highlights the differentiated investor response to FinTech competition, providing insights into the strategic challenges and market dynamics between traditional financial institutions and FinTech startups.

Suggested Citation

  • Del Sarto, Nicola & Ramirez, Irene Comeig & Gai, Lorenzo, 2025. "Impacts of FinTech funding announcements on traditional banks: An event study analysis," Journal of Economics and Business, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:jebusi:v:133:y:2025:i:c:s0148619524000730
    DOI: 10.1016/j.jeconbus.2024.106231
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    More about this item

    Keywords

    FinTech; Banks; Funding events; Event study; Signaling theory; Digital Finance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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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