Paper Title: “From Competitors to Partners: Banks’ Venture Investments in Fintech”
We hypothesize and find evidence that banks use financial investments in fintech startups
as a strategic approach to navigate fintech competition. We first document that banks’
venture investments have increasingly focused on fintech firms. We find that banks fac-
ing greater fintech competition are more likely to make venture investments in fintech
startups. Banks target fintech firms that exhibit higher levels of asset complementarities
with their own business. Finally, our instrumental variable analyses show that financial
investments result in increased probabilities of operational collaborations and knowledge
transfer between the investing bank and the fintech investee.
Presenter: Yiming Qian (UConn)
Coauthors: Manju Puri (Duke) and Xiang Zheng (Uconn)
Discussant: Paul H. Beaumont (McGill)