Do European fintech benefit from bank-affiliated VCs?

La fintech européenne bénéficie-t-elle des capital-risqueurs affiliés aux banques ?

Aymen Turki () and Narmin Nahidi
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Aymen Turki: CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne

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Abstract: In the current study, we scrutinize the efficacy of bank-affiliated venture capital (BVC) in augmenting the performance of European FinTech firms, with a specific sample size of 105 firms. The investigation is anchored in a resource-based view (RBV) and examines the strategic comportment of banks vis-à-vis FinTech enterprises. Utilizing a dataset that encompasses pre-Brexit European FinTech firms from 2006 to 2019, we implement logistic regression models for our primary analysis. Propensity score matching is invoked to mitigate selection bias, and machine learning techniques are applied to address data imbalance. The empirical evidence demonstrates that FinTech firms backed by BVC exhibit superior profitability and asset performance compared to their non-BVC-backed counterparts. The robustness of these findings persists even after accounting for selection bias and data imbalance. The study posits that bank-affiliated venture capital serves as a pivotal criterion for FinTech entrepreneurs in investor selection, thereby enriching the scholarly discourse on the symbiotic relationship between traditional banking institutions and emergent financial technologies within a European context characterized by information asymmetry and resource-based complementarities.

Date: 2024-06
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Published in International Review of Economics and Finance, 2024, 93, pp.167-188. ⟨10.1016/j.iref.2024.03.061⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04904546

DOI: 10.1016/j.iref.2024.03.061

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