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The role of location in FinTech formation

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  • Laivi Laidroo
  • Mari Avarmaa

Abstract

Given the rapid emergence of FinTechs, the objective of this paper is to determine location-specific factors associated with FinTech establishment intensity using Porter’s diamond framework. The analysis is based on a country-level dataset covering the period of 2007–2017 and 107 countries. The results reveal that greater FinTech establishment intensity characterizes smaller countries, countries with stronger information and communications technology (ICT) services clusters, and countries that have experienced a crisis during the recent decade. Greater FinTech establishment intensity is also observed in countries with greater tertiary education enrolment rates, stronger university-industry cooperation, greater fixed line availability, and overall ICT readiness. The macroeconomic situation and indicators of financial development prove to be important determinants of FinTech formation. Given the importance of several dimensions of location’s diamond in FinTech formation, FinTech entrepreneurs could benefit from a careful analysis of the diamond of locations that they are considering as potential places of doing business. Countries hoping to become more attractive FinTech establishment sites, in turn, should focus on the elimination of weaknesses in the location’s diamond in close co-operation with FinTechs.

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  • Laivi Laidroo & Mari Avarmaa, 2020. "The role of location in FinTech formation," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 32(7-8), pages 555-572, August.
    • Handle: RePEc:taf:entreg:v:32:y:2020:i:7-8:p:555-572
    DOI: 10.1080/08985626.2019.1675777
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    Citations

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    Cited by:

    1. Barbara Będowska-Sójka & Agata Kliber & Laivi Laidroo, 2023. "Has the pandemic changed the relationships between fintechs and banks?," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 33(4), pages 15-33.
    2. Oliver Werth & Davinia Rodríguez Cardona & Albert Torno & Michael H. Breitner & Jan Muntermann, 2023. "What determines FinTech success?—A taxonomy-based analysis of FinTech success factors," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-22, December.
    3. Luiz Antonio Joia & Rodrigo Proença, 2022. "The social representation of fintech from the perspective of traditional financial sector professionals: evidence from Brazil," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-27, December.
    4. Miglo, Anton, 2022. "The role of location in the emergence of crowdfunding," MPRA Paper 115833, University Library of Munich, Germany.
    5. Santiago Carbó-Valverde & Pedro J. Cuadros-Solas & Francisco Rodríguez-Fernández, 2022. "Entrepreneurial, institutional and financial strategies for FinTech profitability," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-36, December.
    6. Pacelli, Vincenzo & Miglietta, Federica & Foglia, Matteo, 2022. "The extreme risk connectedness of the new financial system: European evidence," International Review of Financial Analysis, Elsevier, vol. 84(C).
    7. Molla, Alemayehu & Biru, Ashenafi, 2023. "The evolution of the Fintech entrepreneurial ecosystem in Africa: An exploratory study and model for future development," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).

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