Do banks experience value creation from Fintech M&As in United States?

This study examines the value creation in banks from mergers and acquisitions (M&As) with financial technology startups (defined as Fintech) and whether these M&As outperformed the deals where non-fintech target firms were involved during the period from 2010 to 2018. From a sample of 759 deals, only in 37 of them are detected fintechs as targets. The cumulative abnormal returns of M&As are studied through the event study methodology using 21-day, 7-day and 3-day event windows. Furthermore, several regression analyses study the deal and firm characteristics that drive the impact of deals on acquirers’ value. The results indicate an overall 0.56% statistically significant abnormal return for banks when involving in M&As but no evidence of higher value creation in the case of fintech target firms. In addition, this research evidences that public target firms have a negative impact on the cumulative abnormal returns of acquirers, with a stronger effect by public fintech targets. Furthermore, the results indicate that multiple acquisitions have negative effect on banks, however no evidence was found in favour of the higher relative size.