FINANCIAL STRATEGIES OF FINTECH FIRMS: A COMPARISON BETWEEN DEVELOPED AND DEVELOPING ECONOMIES

Abstract

Purpose: This paper investigates the determinants of capital structure and investment strategies in fintech companies, comparing firms in developed and developing countries. It seeks to identify how economic environments influence these financial strategies and the role of corporate governance in these decisions.

Design/Methodology/Approach: This quantitative research study analyzes financial data from 250 fintech firms over 17 years (2005-2021). It utilizes descriptive statistics, correlation analysis, and regression analysis to examine key financial metrics such as debt-equity ratios, share-market returns, GDP growth, inflation rates, and risk-free rates. Tools used for the analysis include IBM SPSS 26.0 and Microsoft Excel.

Findings: The findings reveal significant differences between fintech firms in developed and developing countries. Developed countries exhibit more stable and favourable financial metrics, with positive correlations between debt ratios and share-market returns, GDP, inflation, and risk-free rates. In contrast, negative correlations exist between long-term debt and these economic indicators. The COVID-19 pandemic has exacerbated financial vulnerabilities, particularly in developing countries, resulting in increased financial leverage and decreased share-market returns. The study underscores the critical role of corporate governance in influencing financial decisions and stability.

Originality/Value: This research fills the gap in understanding fintech firms' comparative financial behaviours and strategies across different economic contexts. It provides valuable insights for policymakers, managers, and investors to foster sustainable growth in the fintech sector by addressing economic disparities and promoting robust corporate governance practices.