Does Fintech Contribute to Systemic Risk? Evidence from the U.S. And Europe

Fintech has increasingly become a part of the global economy with the evolution of technology, increasing investments in fintech firms, and greater integration between traditional incumbent financial firms and fintech. Since the 2007-2009 financial crisis, more attention has also been given to systemic risk and the impact of financial institutions on systemic risk. As fintech grows, so too should the concern for its possible impact on systemic risk. This paper analyzes two indices of public fintech firms (one for the United States and another for Europe) by computing the Delta CoVaR of the fintech firms against the financial system to measure their impact on systemic risk. Our results show that at this time fintech firms do not greatly contribute to systemic risk.