Fin vs. tech: are trust and knowledge creation key ingredients in fintech start-up emergence and financing?

Abstract

We investigate how the emergence of fintech start-ups and their financing is shaped by regional knowledge creation and lack of trust in financial services incumbents across 21 OECD countries, 226 regions and over the 2007-2014 period. We find that knowledge generated in the IT sector is much more salient for fostering new fintech start-ups than knowledge generated in the financial services sector. Additionally, the importance of new knowledge created in the financial services sector (IT sector) increases (decreases) as fintech start-ups grow and seek financing. When the level of trust in financial services incumbents falls within a region, this is followed by an increase in the financing provided to fintech start-ups. Nevertheless, regions with historically low average levels of trust in financial services incumbents attract less fintech investment overall.

External Enablers of Entrepreneurship: A Review and Agenda for Accumulation of Strategically Actionable Knowledge

“…Papers capturing multiple EEs highlight two types of interaction effects: (1) a supplementary EE enhances the impact of what is construed as the main EE, and (2) the enabling influence of one EE is contingent on the occurrence of another environmental change that may not yet have occurred. An example of the former is fintech development (main) enabling new product offerings while erosion of trust in the traditional financial industry due to the Global Financial Crisis (supplementary) increases legitimacy and expands demand for the new alternatives (Cojoianu et al, 2020). As an example of the latter, papers on economic transition emphasize the lack of sociocultural acceptance and legal infrastructure, suppressing the enabling impact of another environmental change (e.g., legalization of private new ventures; Ahlstrom & Bruton, 2010; Smallbone & Welter, 2012; Welter & Smallbone, 2011).…”

Topic-based classification and identification of global trends for startup companies

“…For example, Tinder registered in Crunchbase with a year of establishment being 2012 was a startup in that particular year. The coverage of the database spans from firms that became very large in the recent past (Cojoianu et al, 2021 ) to small companies that might have been founded recently (Alexy et al, 2012 ). Crunchbase predominantly contains ambitious “venture capital oriented innovative entrepreneurial firms” (Leendertse et al, 2021 ) “as opposed to restaurants, nail salons, and other more personal, life-style, and conventional entrepreneurship” (Yu & Fleming, 2021 ).…”

“…For example, Tinder registered in Crunchbase with a year of establishment being 2012 was a startup in that particular year. The coverage of the database spans from firms that became very large in the recent past (Cojoianu et al, 2021) to small companies that might have been founded recently (Alexy et al, 2012).…”

Classification of FinTech Patents by Machine Learning and Deep Learning Reveals Trends of FinTech Development in China

“…Zhao et al [26] directly take the number of patents applied by financial institutions as the proxy variable of FinTech innovation. Cojoianu et al [27] use patents filed by FinTech startups to measure their innovation. However, these methods can only measure the FinTech innovation carried out by the financial sectors and cannot cover other sectors.…”