Abstract
The study examines the role of institutional factors in fintech expansion by using Fintech licencing, macroeconomic and bank industry data from 2005 to 2019 in 30 EU and related countries. We found that investors establish fintech companies in countries where environmental uncertainties and resource asymmetries are minimised. The findings indicate that an institutional framework that limits corruption and establishes transparent, accountable and ownership-friendly regulations, leads to the rapid growth of Fintech companies. Institutional factors keep their decisive role during the period of regulatory transformation and bank crises. We also found that PSD2 regulation that unifies technological and reporting standards has also been accommodating to the fintech sector's growth. The study contributes to current literature and leads to significant policy implications by providing extensive evidence that institutions facilitate the fintech industry's growth.The study examines the role of institutional factors in fintech expansion by using Fintech licencing, macroeconomic and bank industry data from 2005 to 2019 in 30 EU and related countries. We found that investors establish fintech companies in countries where environmental uncertainties and resource asymmetries are minimised. The findings indicate that an institutional framework that limits corruption and establishes transparent, accountable and ownership-friendly regulations, leads to the rapid growth of Fintech companies. Institutional factors keep their decisive role during the period of regulatory transformation and bank crises. We also found that PSD2 regulation that unifies technological and reporting standards has also been accommodating to the fintech sector's growth. The study contributes to current literature and leads to significant policy implications by providing extensive evidence that institutions facilitate the fintech industry's growth.