1 Introduction
2 Theoretical background and hypotheses
2.1 A resource-based theory approach to knowledge spillovers and fintech entrepreneurship
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H.1a. Regional knowledge created in the IT sector is positively related to regional fintech venture creation and financing.
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H.1b. Regional knowledge created in the financial services sector is positively related to regional fintech venture creation and financing.
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H.2a. Regional IT sector workforce productivity is positively related to fintech venture creation and financing.
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H.2b. Regional financial services sector workforce productivity is positively related to fintech venture creation and financing.
2.2 Social norms and lack of trust in financial services incumbents
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H.3. The level of trust in financial services incumbents is negatively related to fintech emergence and financing.
3 Data and methodology
3.1 Dependent variables
3.1.1 New regional fintech start-ups and fintech financing
3.2 Explanatory variables
3.2.1 New regional knowledge creation in financial services incumbents
3.2.2 New regional knowledge creation in the IT sector
3.2.3 Lack of trust in financial services incumbents
3.2.4 Regional workforce productivity in the IT and finance sectors
3.3 Control variables
3.4 Model specification
4 Synthesis of results
4.1 Regional fintech entry
Dependent variable: number of new fintech start-ups by region | All fintech | B2B fintech | B2C fintech | |||
---|---|---|---|---|---|---|
Model 1a | Model 1b | Model 1c | ||||
Within-region variation | Between-region variation | Within-region variation | Between-region variation | Within-region variation | Between-region variation | |
New ICT incumbent knowledge creation | 0.042*** | 0.541** | 0.062*** | 0.425* | 0.046 | 0.319 |
(0.012) | (0.254) | (0.019) | (0.246) | (0.029) | (0.259) | |
New financial services incumbent knowledge creation | 0.021*** | 0.116* | 0.021 | 0.095 | 0.059*** | − 0.023 |
(0.007) | (0.069) | (0.014) | (0.066) | (0.009) | (0.071) | |
Lack of trust | − 0.116 | − 0.054 | − 0.096 | − 0.257 | − 0.327* | 0.232 |
(0.084) | (0.388) | (0.116) | (0.442) | (0.186) | (0.554) | |
Productivity financial and insurance sector | 0.185* | − 0.009 | 0.321** | − 0.150 | 0.150 | 0.366 |
(0.098) | (0.215) | (0.153) | (0.260) | (0.221) | (0.293) | |
Productivity IT sector | 0.047 | 0.724*** | − 0.011 | 0.881*** | 0.034 | 0.664** |
(0.083) | (0.192) | (0.092) | (0.215) | (0.169) | (0.275) | |
Regional supply of investment banking services ($m) | − 0.110 | 0.137 | − 0.105 | 0.158 | − 0.082 | 0.076 |
(0.157) | (0.228) | (0.283) | (0.334) | (0.240) | (0.246) | |
Country demand for investment banking services ($m) | 0.011 | − 0.783** | − 0.150 | − 0.623* | 0.032 | − 0.756* |
(0.104) | (0.323) | (0.147) | (0.361) | (0.195) | (0.386) | |
GDP per capita ($/capita) | − 0.004 | 0.252 | 0.351 | − 0.209 | 0.364 | − 0.258 |
(0.205) | (0.268) | (0.355) | (0.339) | (0.627) | (0.701) | |
Country R&D as % GDP | 0.279 | − 0.046 | − 0.091 | 0.266 | 0.507 | − 0.197 |
(0.360) | (0.467) | (0.505) | (0.581) | (0.766) | (0.856) | |
Broadband subscriptions | 0.289 | − 0.719* | 0.305 | − 0.753 | 0.543 | − 0.857 |
(0.266) | (0.421) | (0.367) | (0.489) | (0.473) | (0.575) | |
Mobile subscriptions | − 0.078 | − 0.235 | − 0.122 | − 0.123 | 0.104 | − 0.522 |
(0.126) | (0.367) | (0.207) | (0.412) | (0.308) | (0.646) | |
Bank deposits ($bn) | 0.090 | 0.899*** | 0.170 | 0.763** | − 0.144 | 1.497*** |
(0.108) | (0.286) | (0.172) | (0.308) | (0.293) | (0.533) | |
Retail fin. serv. spending % income | 0.334 | 0.121 | 0.482 | 0.056 | 0.593 | − 0.490 |
(0.228) | (0.404) | (0.345) | (0.528) | (0.475) | (0.592) | |
Retail insurance spending % income | 0.387* | − 0.102 | 0.278 | 0.040 | 0.296 | 0.084 |
(0.234) | (0.302) | (0.372) | (0.422) | (0.643) | (0.637) | |
Regional fintech VC investment | 0.006 | − 0.345 | 0.012* | − 0.252 | − 0.008 | 0.009 |
(0.005) | (0.486) | (0.007) | (0.450) | (0.008) | (0.455) | |
Research institutes per capita | 0.030 | 0.002 | 0.153 | |||
(0.148) | (0.141) | (0.144) | ||||
AIC | 2422.365 | 2278.456 | 1223.561 | |||
BIC | 2636.864 | 2492.955 | 1438.06 | |||
Loglikelihood | − 1172.182 | − 1100.228 | − 572.7805 | |||
Observations | 1808 | 1808 | 1808 | |||
Number of groups (regions) | 226 | 226 | 226 |
4.2 Regional fintech financing
Dependent variable: ln (regional fintech start-up investment) | VC fintech | VC B2B | VC B2C | |||
---|---|---|---|---|---|---|
Model 2a | Model 2b | Model 2c | ||||
Within-region variation | Between-region variation | Within-region variation | Between-region variation | Within-region variation | Between-region variation | |
New ICT knowledge creation | − 0.018 | 0.171*** | 0.010 | 0.103*** | − 0.035 | 0.084*** |
(0.034) | (0.042) | (0.026) | (0.035) | (0.030) | (0.028) | |
New financial services knowledge creation | 0.119 | 0.515*** | 0.120 | 0.433*** | 0.153 | 0.219** |
(0.133) | (0.145) | (0.133) | (0.136) | (0.109) | (0.100) | |
Lack of trust | 0.350*** | − 0.662*** | 0.314*** | − 0.499*** | 0.148** | − 0.147 |
(0.112) | (0.247) | (0.092) | (0.193) | (0.068) | (0.157) | |
Productivity financial and insurance sector | − 0.101 | 0.049 | − 0.041 | 0.023 | − 0.066 | 0.023 |
(0.103) | (0.121) | (0.082) | (0.109) | (0.066) | (0.070) | |
Productivity IT sector | − 0.181 | 0.543** | − 0.136 | 0.343* | 0.025 | 0.061 |
(0.188) | (0.246) | (0.164) | (0.203) | (0.142) | (0.140) | |
GDP per capita ($/capita) | − 0.125 | 0.182 | 0.079 | − 0.121 | 0.040 | 0.098 |
(0.577) | (0.558) | (0.531) | (0.520) | (0.362) | (0.344) | |
Regional supply of investment banking services ($m) | − 0.020 | 0.009 | 0.002 | − 0.012 | − 0.031 | 0.026 |
(0.045) | (0.046) | (0.041) | (0.041) | (0.029) | (0.027) | |
Country demand for investment banking services ($m) | − 0.019 | 0.048 | 0.006 | 0.036 | − 0.012 | 0.001 |
(0.050) | (0.066) | (0.048) | (0.059) | (0.045) | (0.043) | |
Country R&D as % GDP | − 1.195*** | 1.080*** | − 0.918*** | 0.872*** | − 0.534*** | 0.493*** |
(0.253) | (0.271) | (0.218) | (0.239) | (0.133) | (0.137) | |
Broadband subscriptions | 0.066 | − 0.427** | 0.052 | − 0.285* | 0.057 | − 0.137 |
(0.072) | (0.195) | (0.057) | (0.163) | (0.041) | (0.114) | |
Mobile subscriptions | 1.467*** | − 1.664*** | 0.970*** | − 1.118*** | 0.450** | − 0.601** |
(0.358) | (0.416) | (0.296) | (0.346) | (0.220) | (0.251) | |
Bank deposits ($bn) | 0.003 | − 0.036 | 0.006 | − 0.061 | 0.017 | − 0.035 |
(0.048) | (0.103) | (0.040) | (0.093) | (0.035) | (0.057) | |
Retail fin. serv. spending % income | − 0.064 | 0.185 | − 0.016 | 0.082 | 0.007 | − 0.002 |
(0.236) | (0.241) | (0.178) | (0.176) | (0.138) | (0.147) | |
Retail insurance spending % income | − 0.925*** | 1.017*** | − 0.674*** | 0.702*** | − 0.340*** | 0.339*** |
(0.187) | (0.212) | (0.149) | (0.166) | (0.112) | (0.125) | |
Research institutes per capita | − 0.106** | − 0.066 | − 0.026 | |||
(0.052) | (0.041) | (0.031) | ||||
AIC | 3670.742 | 3055.726 | 2422.365 | |||
BIC | 3885.241 | 3270.225 | 2636.864 | |||
Loglikelihood | − 1796.371 | − 1488.863 | − 1172.182 | |||
Observations | 1808 | 1808 | 1808 | |||
Number of groups | 226 | 226 | 226 |
Dependent variable: ln (regional fintech start-up investment) | VC capital markets | VC data | VC digital infrastructure | VC IWM | VC payments | |||||
---|---|---|---|---|---|---|---|---|---|---|
Model 3a | Model 3b | Model 3c | Model 3d | Model 3e | ||||||
Within-region variation | Between-region variation | Within-region variation | Between-region variation | Within-region variation | Between-region variation | Within-region variation | Between-region variation | Within-region variation | Between-region variation | |
New ICT knowledge creation | 0.010 | − 0.003 | 0.015 | 0.034** | 0.016 | 0.030* | − 0.036 | 0.087*** | 0.011 | 0.086*** |
(0.013) | (0.011) | (0.018) | (0.015) | (0.020) | (0.018) | (0.025) | (0.033) | (0.025) | (0.030) | |
New financial services knowledge creation | 0.036 | 0.358*** | − 0.016 | 0.432*** | 0.122 | 0.189** | 0.096 | 0.322*** | 0.172 | 0.125 |
(0.056) | (0.097) | (0.077) | (0.110) | (0.111) | (0.094) | (0.100) | (0.116) | (0.125) | (0.138) | |
Lack of trust | 0.089*** | − 0.170** | 0.226*** | − 0.374*** | 0.206*** | − 0.320** | 0.114 | − 0.295 | 0.094 | − 0.218 |
(0.031) | (0.070) | (0.068) | (0.111) | (0.063) | (0.138) | (0.076) | (0.206) | (0.084) | (0.177) | |
Productivity financial and insurance sector | − 0.006 | − 0.008 | − 0.023 | − 0.015 | − 0.062 | 0.016 | − 0.030 | − 0.041 | − 0.000 | 0.049 |
(0.043) | (0.061) | (0.047) | (0.066) | (0.048) | (0.064) | (0.060) | (0.076) | (0.066) | (0.081) | |
Productivity IT sector | 0.023 | 0.037 | − 0.042 | 0.170 | − 0.087 | 0.222* | − 0.172 | 0.385* | − 0.068 | 0.187 |
(0.080) | (0.088) | (0.103) | (0.108) | (0.109) | (0.118) | (0.147) | (0.203) | (0.152) | (0.178) | |
Control variables | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
AIC | 512.2154 | 1823.922 | 2000.71 | 2482.415 | 2722.755 | |||||
BIC | 726.7145 | 2038.421 | 2215.209 | 2696.914 | 2937.254 | |||||
Loglikelihood | − 217.1077 | − 872.9609 | − 961.3551 | − 1202.208 | − 1322.377 | |||||
Observations | 1808 | 1808 | 1808 | 1808 | 1808 | |||||
Number of groups | 226 | 226 | 226 | 226 | 226 |