Do FinTech Acquisitions Affect Banks' ESG Performance? Evidence from Global M&As

This study investigates how mergers and acquisitions (M&A) involving FinTech companies influence the Environmental, Social, and Governance (ESG) performance of acquiring banks. Using a global sample of 105 M&A deals completed by banks worldwide between 2009 and 2023, our findings indicate that FinTech acquisitions tend to enhance banks’ ESG performance. However, this effect is not immediately observable, manifesting only in the fifth year post-acquisition. To refine the analysis, we match banks that engaged in FinTech acquisitions with similar banks that did not, controlling for pre-acquisition characteristics. This approach reveals a positive and significant effect on environmental (E) and overall ESG scores starting from the third year, with social (S) scores showing significant improvement as early as the first year post-acquisition. These findings contribute to the understanding of how FinTech M&As shape the ESG performance of traditional banks. The results also provide valuable insights for bank managers, policymakers, and financial regulators, emphasizing the role of FinTech acquisitions in advancing sustainability within the banking sector.