Issue: 2023/Vol.33/No.4, Pages 15-33


Barbara Będowska-Sójka , Agata Kliber , Laivi Laidroo 

Full paper (PDF)    RePEC

Cite as: B. Będowska-Sójka, A. Kliber, L. Laidroo. Has the pandemic changed the relationships between fintechs and banks?. Operations Research and Decisions 2023: 33(4), 15-33. DOI 10.37190/ord230402

We examine the impact of COVID-19 on the banking and fintech sectors based on the relationships of the respective stock indices from December 2017 to April 2022. We analyse dynamic correlations within multivariate GARCH models and relationships in tails with the quantile coherency approach. Returns of fintech and banks dropped simultaneously at the beginning of the pandemic, but the analysis of cumulative returns and draw-downs reveals that the former recovered faster. Banks and fintechs experienced sharp declines together and fintech experienced extreme growth during the downfalls in the banking sector. However, the latter relationship disappears when we analyze only the banks from the USA and Eurozone. Thus, integrating with fintech may be especially beneficial for banks outside those regions. The ability of fintech to resurface and continue to grow demonstrates its importance in the financial system and confirms the shift toward a digital economy in financial markets.

Keywords: fintech, banks, COVID-19, cumulative return, MGARCH model, quantile coherency

Received: 29 October 2022    Accepted: 17 August 2023
Published online: 22 December 2023