The Determinants of Financial Performance of FinTech Companies: A Logistic Regression Approach

Abstract

Purpose: This study aimed to identify the most important financial indicators that can affect the financial performance of Fintech companies studied.

Methods: The study adopted a logistic regression methodology to measure the determinants of financial performance of Fintech companies.

Finding: The study found that the maturity of the Fintech companies and the net profit ratio are the most important factors affecting the performance of Fintech companies studied.

Implications: The study adopted a logistic regression methodology to measure the determinants of financial performance of Fintech companies.

Originality: The author suggests that Fintech companies should control their costs as much as possible in order to optimise their financial performance.

  • Page Number : 1-9

  • Published Date : 2025-07-28

  • Keywords
    FinTech companies, Financial performance, Financial ratios, Logistic regression

  • DOI Number
    10.15415/jtmge/2025.161001

  • Authors
    Anis Farid Derradji

References

  • Abid, L. (2022). A logistic regression model for credit risk of companies in the service sector. International Research in Economics and Finance, 6(2), 1–10.
  • Affes, W., & Jarboui, A. (2023). The impact of corporate governance on financial performance: A cross-sector study. International Journal of Disclosure and Governance, 20, 374–394.
  • Ali Mirza, S., & Javed, A. (2013). Determinants of financial performance of a firm: Case of Pakistani stock market. Journal of Economics and International Finance, 5(2), 43–52.
  • Anggreini, P., & Santoso, S. (2022). The effect of net income, operating cash flow, and company size on dividend policy in finance company. Arabian Journal of Business and Management Review, 12(4), 1–5.
  • Ankenbrand, T., Dietrich, A., & Bieri, D. (2018). IFZ FinTech study 2018: An overview of Swiss FinTech. Institute of Financial Services Zug IFZ.
  • Arjunwadkar, P. (2018). FinTech: The technology driving disruption in the financial services industry. CRC Press Taylor & Francis Group.
  • Arslanian, H., & Fischer, F. (2019). The future of finance: The impact of FinTech, AI, and crypto on financial services. Springer Nature.
  • Bagh, T., Khan, M., Meyer, N., & Riaz, H. (2023). Impact of boardroom diversity on corporate financial performance. Humanities and Social Sciences Communications, 1–13.
  • Barba Navaretti, G., Calzolari, G., & Franco Pozzolo, A. (2017). FinTech and banks: Friends or foes? Europeye srl.
  • Bömer, M., & Maxin, H. (2018). Why FinTechs cooperate with banks—Evidence from Germany. ZVersWiss, 359–386.
  • Braun, A., & Schreiber, F. (2017). The current InsurTech landscape: Business models and disruptive potential. Institute of Insurance Economics I.VW-HSG, University of St. Gallen.
  • Burke, J. (2021). Financial services in the twenty-first century: The present system and future developments in FinTech and financial innovation. Palgrave Macmillan.
  • Carbó Valverde, S., Cuadros Solas, P. J., & Rodríguez Fernández, F. (2022). Entrepreneurial, institutional and financial strategies for FinTech profitability. Financial Innovation, 8(15), 1–36.
  • Devi, S., Warasniasih, N., Masdiantini, P., & Sri Musmini, L. (2020). The impact of COVID-19 pandemic on the financial performance of firms on the Indonesia Stock Exchange. Journal of Economics, Business & Accountancy Ventura, 23(2), 226–242.
  • Dorfleitner, G., Hornuf, L., Schmitt, M., & Weber, M. (2017). FinTech in Germany. Springer Nature.
  • Fikri, M., Wan Yusoff, W., & Fikri, A. (2020). Financial performance using ratio analysis. Journal of Asian Islamic Higher Institutions, 5, 1–7.
  • Giaretta, E., & Chesini, G. (2021). The determinants of debt financing: The case of FinTech start-ups. Journal of Innovation and Knowledge, 6(4), 268–279.
  • Golubev, A., & Ryabov, O. (2020). Transformation of traditional financial companies into FinTech. ACM, 1–7.
  • Hartuti, S., Rahmawati, C., & Theresia Ernawati, M. (2022). The effect of financial performance on stock prices: Empirical evidence from building construction sub-sector companies. Sanskara Akuntansi dan Keuangan, 1(1), 44–58.
  • Holtfort, T., Horsch, A., & Schwarz, J. (2021). Global FinTech entrepreneurship and its influencing factors: An evolutionary economic analysis. Risk Governance & Control: Financial Markets & Institutions, 11(1), 61–79.
  • Hommel, K., & Bican, P. (2020). Digital entrepreneurship in finance: FinTechs and funding decision criteria. Sustainability, 12(8035), 1–18.
  • Hosmer, D., & Lemeshow, S. (1989). Applied logistic regression. John Wiley & Sons, Inc.
  • Jinasena, D., Spanaki, K., Papadopoulos, T., & Balta, M. (2023). Success and failure retrospectives of FinTech projects: A case study approach. Information Systems Frontiers, 25, 259–274.
  • Kerényi, Á., & Molnár, J. (2017). The impact of the FinTech phenomenon – Radical change occurs in the financial sector? Financial and Economic Review, 16(3), 32–55.
  • Kokh, L., & Kokh, Y. (2020). Banks and FinTech companies: Who's catching up with whom? ACM, 1–6.
  • KPMG. (2023). Pulse of FinTech H1’23.
  • L, P., C, L., & L, M. (2020). The impact of gender on financial performance: Evidence from a sample of Portuguese SMEs. Polish Journal of Management Studies, 22(2), 384–401.
  • Lassala, C., Orero-Blat, M., & Ribeiro-Navarrete, S. (2021). The financial performance of listed companies in pursuit of the Sustainable Development Goals (SDG). Economic Research-Ekonomska Istraživanja, 427–449.
  • Le Thi Kim, N., Duvernay, D., & Le Thanh, H. (2021). Determinants of financial performance of listed firms manufacturing food products in Vietnam: Regression analysis and Blinder–Oaxaca decomposition analysis. Journal of Economics and Development, 23(3), 267–283.
  • Lehenchuk, S., Serpeninova, Y., Zavalii, T., Juhaszova, Z., & Kordošová, A. (2023). The impact of financial performance on the profitability of advertising agencies in the Slovak Republic. Strategic Management, 28(1), 41–50.
  • Li, Y., Spigt, R., & Swinkels, L. (2017). The impact of FinTech start-ups on incumbent retail banks’ share prices. Financial Innovation, 3(26), 1–16.
  • Linawati, N., & Halim, R. (2017). The effect of financial performance and macroeconomic factors on profitability of bidder companies. Jurnal Manajemen dan Kewirausahaan, 19(2), 99–105.
  • Luizazhou. (2024, January 21). Startup failure statistics. Retrieved March 21, 2024, from https://www.luisazhou.com/blog/startup-failure-statistics/
  • Malini, R., & Banu, M. (2019). A study on financial performance analysis of Indian Tobacco Corporation Limited. Indian Journal of Applied Research, 9(2), 20–23.
  • McKinsey & Company. (2023). FinTech’s new paradigm of growth.
  • Meher, B., Singh, M., Birau, R., & Anand, A. (2024). Forecasting stock prices of FinTech companies of India using random forest with high-frequency data. Journal of Open Innovation: Technology, Market, and Complexity, 10, 1–10.
  • Mohamed, H., & Ali, H. (2019). Blockchain, FinTech, and Islamic finance: Building the future in the new Islamic digital economy. Walter de Gruyter Inc.
  • Mudjiyono, & Adi Wicaksono, D. (2022). The effect of gross profit, operational profit and net profit on future cash flows. Journal of Management and Business Environment, 3(2), 172–193.
  • Muhammad Kamran, K., Mohammad, N., & Muhammad, I. (2015). Determinants of financial performance of financial sectors (An assessment through economic value added). Munich Personal RePEc Archive, 1–30.
  • Nicoletti, B. (2017). The future of FinTech: Integrating finance and technology in financial services. Palgrave Macmillan.
  • Nicoletti, B. (2021). Banking 5.0: How FinTech will change traditional banks in the ‘new normal’ post pandemic. Palgrave Macmillan.
  • Parameshwar, H., Sruthie, A., Cisse, M., Ajay Kumar, M., & Misra, S. (2019). FinTech and disruptions: An impact assessment. Journal of Critical Reviews, 6(6), 89–97.
  • Phan, D., Kumar Narayan, P., & Hutabarat, A. R. (2018). Do financial technology firms influence bank performance? Bank Indonesia.
  • Podhorska, I., & Siekelova, A. (2019). Enterprises’ financial performance in a globalized world. Globalization and Its Socio-Economic Consequences.
  • Razak, A., Nurfitriana, F., Wana, D., Ramli, Umar, I., & Endri, E. (2020). The effects of financial performance on stock returns: Evidence of machine and heavy equipment companies in Indonesia. Research in World Economy, 11(6), 131–138.
  • Reyes-Mercado, P. (2021). FinTech strategy: Linking entrepreneurship, finance, and technology. Springer Nature.
  • Setyo Lestari, H. (2021). Financial leverage and financial performance of conventional banks in Indonesia. Journal of Hunan University (Natural Sciences), 48(2), 24–35.
  • Shahan Ali, S., Mubeen, M., Lal, I., & Hussain, A. (2018). Prediction of stock performance by using logistic regression model: Evidence from Pakistan Stock Exchange (PSX). Asian Journal of Empirical Research, 8(7), 247–258.
  • Siahaan, M., Sipahutar, M., Sinambela, T., Pardede, P., Naibaho, P., & Pasaribu, R. (2023). Financial ratio analysis to measure financial performance of CUM Anugerah Bekasi Cooperative. Business Review, 8(7), 1–20.
  • Song, X., Yu, H., & He, Z. (2023). Heterogeneous impact of FinTech on the profitability of commercial banks: Competition and spillover effects. Journal of Risk and Financial Management, 16(471), 1–17.
  • Suk Yoon, S., Lee, H., & Oh, I. (2023). Differential impact of FinTech and GDP on bank performance: Global evidence. Journal of Risk and Financial Management, 16(304), 1–17.
  • Tajimi, K. (2021). The impact of FinTech on existing financial institutions. In S. Kaji, T. Nakatsuma, & M. Fukuhara (Eds.), The economics of FinTech. Springer Nature Singapore.
  • Tarigan, J., Listijabudhi, S., Hatane, S., & Widjaja, D. (2019). The impacts of intellectual capital on financial performance: Evidence from Indonesian manufacturing industry. Indonesian Journal of Business and Entrepreneurship, 5(1), 65–76.
  • Tehrani, R., Mehragan, M., & Reza Golkani, M. (2012). A model for evaluating financial performance of companies by data envelopment analysis: A case study of 36 corporations affiliated with a private organization. International Business Research, 5(8), 8–16.
  • Tudose, M., Rusu, V., & Avasilcai, S. (2022). Financial performance – Determinants and interdependencies between measurement indicators. Business, Management and Economics Engineering, 20(1), 119–138.
  • Viet Ha Hoang, T., Dang, N., Dung Tran, M., Thuy Van Vu, T., & Pham, Q. (2019). Determinants influencing financial performance of listed firms: Quantile regression approach. Asian Economic and Financial Review, 9(1), 78–90.
  • Yahoo Finance. (n.d.). Yahoo Finance. Retrieved March 14, 2024, from https://finance.yahoo.com/
  • Yunus, I., Rasuli, L., & Lukum, A. (2020). Comparative analysis of financial performance before and after acquisition: A study in acquiring companies listed in Indonesian Stock Exchange, period of 2012–2018. Advances in Economics, Business and Management Research, 173, 175–186.
  • Zhao, J., Li, X., Yu, C.-H., Chen, S., & Lee, C.-C. (2022). Riding the FinTech innovation wave: FinTech, patents and bank performance. Journal of International Money and Finance, 122, 1–19.