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
Pages (from-to)1761-1792
Number of pages32
JournalThe European Journal of Finance
Issue number15
Publication statusPublished - 5 Jan 2023

External IDs

Scopus 85145818155
Mendeley 3eeea43e-31f8-374e-8e27-05f9ee4c28cf
WOS 000907977800001
ORCID /0000-0002-0576-7759/work/142239308


Research priority areas of TU Dresden

DFG Classification of Subject Areas according to Review Boards

Subject groups, research areas, subject areas according to Destatis


  • Fintech, bank performance, default risk, financial stability, Bank performance, Default risk, Financial stability, Fintech