This study investigates the impact of Environmental, Social, and Governance (ESG) ratings on the risk-adjusted returns of fintech firms across different segments, including fintech banks, paytech, wealth tech, fintech infrastructure, and cryptocurrency firms. Using a sample dataset comprising 104 worldwide fintech firms spanning the period from 2012 to 2022, we employ regression analysis to assess the relationship between ESG ratings and stock returns, considering both overall ESG scores and individual pillar ratings. Our findings reveal unique associations between ESG ratings and risk-adjusted returns, varying across different segments of the fintech industry. While high ESG-rated fintech firms exhibit a negative impact on stock returns, low ESG-rated firms show no significant association. Moreover, the environmental pillar rating demonstrates a negative correlation with risk-adjusted returns, whereas social and governance pillar ratings display a positive relationship. Furthermore, infrastructure fintech firms exhibit adistinct pattern, with overall ESG, social and governance ratings positively associated with stock returns. These results highlight the importance of considering ESG factors in evaluating the financial performance of fintech firms, with implications for investors, policymakers and industry practitioners. The study contributes to the existing literature by providing insights into how ESG considerations influence the risk-return profile of fintech firms, offering valuable guidance for sustainable investment strategies in the rapidly evolving fintech landscape.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:umu-226857 |
| Date | January 2024 |
| Creators | Randombage, Sandun, Fernando, Nimesh |
| Publisher | Umeå universitet, Företagsekonomi |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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