Determinants of European FinTech activity: 2008-2015

Abstract: FinTech has grown substantially since the 2008 financial crisis. European FinTech investments have increased from US$ 930 million in 2008 to US$ 46 billion in 2015. However, since FinTech is a relatively new industry, little academic research on the factors that influence FinTech development has been done. Therefore, this study aims to provide more insight into determinants of the European FinTech industry, by investigating its development in 24 European countries between 2008 and 2015. We expect that the size of the financial market, the number of mobile phone subscriptions, consumer trust and institutional development positively affect FinTech, but that it is negatively affected by the soundness of the financial system, collectivism and uncertainty avoidance. Regressions provide evidence that uncertainty avoidance and soundness of the financial system affect FinTech as per our hypotheses, but that consumer confidence is negatively related to FinTech development. We did not find any significant evidence of the effect of the other variables on FinTech activity.