Fintech Venture Capital

40 Pages Posted: 27 May 2016 Last revised: 9 Feb 2018

Douglas J. Cumming

York University - Schulich School of Business

Armin Schwienbacher

SKEMA Business School

Date Written: May 7, 2016

Abstract

We document a notable change in the pattern of fintech VC investments around the world relative to other types of investments after the global financial crisis. We argue that the spike in fintech VC in certain countries is attributable to differential enforcement of financial institution rules amongst start-ups versus large established financial institutions after the financial crisis. Consistent with this regulatory arbitrage view, we show the marked increase in fintech is more pronounced in countries without a major financial center. Also, we show the fintech boom is more pronounced for smaller private limited partnership VCs that likely have less experience with prior VC booms and busts. These fintech VC deals are less likely to be successfully exited as IPOs and acquisitions, and substantially more likely to be liquidated, especially when located in countries without a major financial center.

Keywords: International Venture Capital, Fintech, Governance, Financial Regulation, Regulatory Arbitrage

JEL Classification: G24, G28

Suggested Citation

Cumming, Douglas J. and Schwienbacher, Armin, Fintech Venture Capital (May 7, 2016). Available at SSRN: https://ssrn.com/abstract=2784797 or http://dx.doi.org/10.2139/ssrn.2784797

Douglas J. Cumming

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Armin Schwienbacher (Contact Author)

SKEMA Business School ( email )

Lille
France

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