Does Fintech Development Improve Firm Performance in Emerging Markets?

Abstract

This study examines the relationship between FinTech development and firm performance among listed firms in emerging market economies over the period 2014–2024. Firm performance is measured by firm growth, return on assets (ROA), and Tobin's Q. The study further investigates whether the effect of FinTech development is stronger for firms operating in industries with higher external financial dependence (EFD). The findings indicate that FinTech development is positively associated with firms' market valuation, suggesting that financial markets recognize the long-term growth opportunities created by digital financial innovation. Furthermore, the effects of FinTech development vary across firm characteristics, regions, and levels of external financial dependence. The results remain consistent under the robustness tests using an alternative measure of FinTech development. Overall, the findings suggest that the benefits of FinTech development are reflected more strongly in market valuation than in short-term operating performance.