Bank market power and performance of financial technology firms

We adopt a novel variation of the traditional structure-conduct-performance modelling approach, looking at between, rather than within, industries to study the impact of changes in the bank market structure on the corporate performance of financial technology (fintech) firms using firm-level data. We use two samples, one with 231 fintech firms and one with 231 non-fintech firms across 24 industrialized countries over the 10-year period from 2008 to 2017. We find that changes in bank market power have a positive impact on the performance of fintech companies suggesting that such firms complement rather than compete with banks. On the other hand, within the non-fintech sector, we find that changes in bank market power have no impact on non-fintech firms. Our results are robust to several tests.