Dynamic connectedness between FinTech and energy markets: Evidence from fat tails, serial dependence, and Bayesian approach

Le Thanh Ha, Ahmed Bouteska and Murad Harasheh

International Review of Economics & Finance, 2024, vol. 93, issue PB, 574-586

Abstract: In a complex global environment, modeling the relationships among several markets and asset classes has become more challenging. Literature strives to provide conclusive evidence due to system complexities. Therefore, we investigate the dynamic relationship between Fintech and energy sectors using fat tails, serial dependence, and the Bayesian approach from May 1, 2019, to October 28, 2022. Results unveil significant temporal variations in network interconnections, with an evident increase in interlinkages across short, medium, and long durations due to transient market events. The COVID-19 pandemic and the onset of the Russia-Ukraine conflict have substantially altered the long-term relational dynamics within these networks. An analysis of net directional linkages reveals a pivotal shift in market roles—from being predominantly shock recipients to becoming shock transmitters—highlighted during the COVID-19 pandemic and the initial phase of the Russia-Ukraine War. Initial observations indicate that, amid the global impact of COVID-19, Fintech markets absorbed shocks through investments in green bonds and renewable energy sources like wind, solar, and clean energy. These findings suggest that while Fintech consistently acts as a shock absorber in long-term scenarios, it assumes the role of a shock transmitter during adverse economic states.

Keywords: Bayesian vector heterogeneous autoregressions; FinTech innovation development; Energy dynamics; COVID-19; Russia-Ukraine conflict (search for similar items in EconPapers)
JEL-codes: F3 G12 Q43 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:93:y:2024:i:pb:p:574-586

DOI: 10.1016/j.iref.2024.04.034

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