How do fintech start-ups affect financial institutions’ performance and default risk?

Research output: Contribution to journalResearch articleContributedpeer-review



We examine the impact of fintech start-ups on the performance and default risk of traditional financial institutions. We find a positive relationship between fintech start-up formations and incumbent institutions’ performance for the period 2005–2018 and a large sample of financial institutions from 87 countries. We further analyze the link between fintech start-up formations and the default risk of traditional financial institutions. Fintech start-up formations decrease stock return volatility of incumbent institutions and decrease the systemic risk exposure of financial institutions. The findings indicate that legislators and financial supervisory authorities should closely monitor the development of fintech start-ups, because fintechs not only have a positive effect on the financial sector’s performance but also can improve financial stability relative to the status quo.


Original languageEnglish
JournalThe European Journal of Finance
Publication statusPublished - 5 Jan 2023

External IDs

Scopus 85145818155
Mendeley 3eeea43e-31f8-374e-8e27-05f9ee4c28cf



  • Fintech, bank performance, default risk, financial stability