Var and Market Value of Fintech Companies: An Analysis and Evidence From Global Data
Najaf, K., Schinckus, C., Liew, C.Y. (2020). VaR and market value of fintech companies: An analysis and evidence from global data. Managerial Finance. https://doi.org/10.1108/MF-04-2020-0169
Posted: 9 Feb 2021 Last revised: 12 Mar 2021
Date Written: December 23, 2020
Purpose – This study aims at determining the portfolio value at risk (VAR) and market value of Fintech firms and compare it with their counterparts.
Design/methodology/approach – By using on a dataset from 46 countries between 2009 and 2018, the authors use five measures of VaR to investigate their empirical dynamics in relation with the market value of Fintech and non-Fintech companies.
Findings – The empirical results indicate that Fintech firms’ portfolios have a higher financial risk and a higher market value in comparison to non-fintech firms’ portfolios. Furthermore, the authors also report that the Fintech firm portfolios experience more financial risk regardless of the holding period as long-term (one year) or short-term (quarter).
Research limitations/implications – There are some limitations in this research. This research does not segregate Fintech firms into their different types of services, such as direct financial investment services, loan provision services, insurance services (InsurTech), etc. The authors only aggregate the Fintech firms by country and region. Future research may consider analysing Fintech firms by differentiating the kind of financial services they offer
Practical implications – Given the importance of their market value, the results imply that Fintech companies might contribute significantly to financial fluctuations in case of large variations of the market. In terms of policy recommendation, this observation requires a particular attention from the regulatory bodies who need to find the best economic balance between promoting innovation/financial technology and regulating the Fintech companies.
Originality/value – This paper is the first study clarifying the relation of financial risk and market value for the Fintech firms, using the large enough database to obtain significant results. This article implies that Fintech companies require a robust risk management framework.
Keywords: Portfolio risk, Value at risk, FinTech, Portfolio market value
JEL Classification: G39
Suggested Citation: Suggested Citation