The Impact of FinTech Financing Announcement Events on the Stock Prices of Traditional Banks

Abstract

The present study aimed to investigate the impact of FinTech financing announcement events on the stock prices of traditional Iranian banks and to determine whether different FinTech business categories function as substitutes for or complements to conventional banking institutions. This study employed a quantitative event-study design to evaluate the stock market reaction of traditional Iranian banks to FinTech financing announcements occurring between August 2016 and July 2025. The sample consisted of 174 completed financing events involving Iranian FinTech firms and 20 traditional banks listed on the Tehran Stock Exchange and Iran Fara Bourse. Daily stock price data were collected for a 130-day estimation window prior to each event. Abnormal returns were estimated using the market model and ordinary least squares regression. Cumulative average abnormal returns (CAARs) were calculated across multiple event windows surrounding the announcement date. To assess statistical significance and robustness, both the parametric Student’s t-test and the nonparametric generalized sign test were applied. In addition to the aggregate FinTech sample, separate analyses were conducted for Digital Lending, Digital Capital Raising, Digital Payments, Digital Banks, WealthTech, and Alternative Credit Analytics categories. The aggregate analysis revealed no statistically robust evidence that FinTech financing announcements significantly affected the stock prices of traditional banks. Although the Student’s t-test indicated significant negative CAARs for the [-3, +3] (-0.386%, p < .05) and [-5, +5] (-0.447%, p < .10) event windows, normality diagnostics showed distributional violations, and the generalized sign test failed to confirm these effects. Category-level analyses revealed significant heterogeneity. Digital Capital Raising announcements generated positive abnormal performance, with significant CAARs observed for the [0, +1] (0.405%, p < .05) and [0, +3] (0.542%, p < .10) windows, indicating a complementary relationship with traditional banks. Digital Lending announcements produced a significant negative CAAR for the [-1, +1] window (-0.254%, p < .10), suggesting a substitution effect. Digital Payments announcements generated a significant positive event-day CAAR (0.166%, p < .05), supporting a complementary interpretation. The findings indicate that FinTech financing announcements do not exert a uniform influence on traditional bank stock prices. While the aggregate effect of FinTech financing activity is statistically insignificant, important differences emerge across FinTech sectors.