On the time-varying responses of Fintech stock returns to geopolitical, financial and market sentiment shocks

Talel Boufateh, Zied Saadaoui and Zhilun Jiao

The Quarterly Review of Economics and Finance, 2025, vol. 101, issue C

Abstract: Growing uncertainties in the global economy are spurring unprecedented stress on commodity markets, financial systems, and investors’ risk aversion. The fast-growing Fintech sector is not exempt from vulnerability to such shocks. However, previous studies failed to assess the fragility of Fintech stock returns to simultaneous shocks driven by multi-dimensional uncertainty. The present paper is the first to estimate the time-varying responses of Fintech stock returns (FSR) to simultaneous shocks coming from three uncertainty dimensions: geopolitical uncertainty, systemic financial stress and market sentiment. Daily frequency is used to estimate the dynamic under consideration by constructing a TVP-SVAR-SV and conducting several robustness checks. The results reveal that Fintech stock returns respond positively to geopolitical uncertainty except during major uncertainty events and to credit market uncertainty shocks even during the Covid-pandemic and the Russia-Ukraine war. Market sentiment shocks exert a heterogenous effect on FSR. The SWIFT bans triggered negative impacts of the multi-dimensional uncertainty on FSR.

Keywords: Uncertainty, Fintech stock returns; Geopolitical risk; Systemic financial stress; Market sentiment; TVP-SVAR-SV (search for similar items in EconPapers)
JEL-codes: C32 F51 G01 G11 G15 G41 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:101:y:2025:i:c:s1062976924001571

DOI: 10.1016/j.qref.2024.101951

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