FINTECH FINANCING MECHANISMS AND MARKET VALUE OF LISTED COMMERCIAL BANKS IN KENYA

Abstract

This study examined the impact of FinTech financing mechanisms on the market value (Tobin’s Q) of commercial banks listed on the Nairobi Securities Exchange from 2013 to 2023, considering the moderating role of bank size and the effects of the 2016 interest rate cap. Grounded in Financial Intermediation Theory and using a positivist longitudinal panel design with a census approach, the study analyzed quarterly data from regulatory and institutional sources. System GMM addressed endogeneity, Granger causality explored predictive links, and a Difference-in-Differences model evaluated policy effects. The findings confirmed that FinTech financing mechanisms significantly influenced market value, with evidence of both positive and negative effects across channels. However, the 2016 cap reduced overall market value (β=-0.206, p<0.001) and weakened the effectiveness of these innovations. Bank size had no moderating (β = 0.0046, p = 0.853) and interaction effect, though larger banks were more resilient post-policy shift (β = 1.36e-14, p < 0.001). Granger causality suggested dynamic feedback between FinTech adoption and market value. The study recommends reforms to enhance FinTech’s value contribution, including transparent crowdfunding policies, improved credit oversight, and blockchain-based safeguards to ensure sustainable innovation