FinTechs and the Market for Financial Analysis

Abstract

Market intelligence FinTechs synthesize many data sources, including non-traditional ones, relevant for equity investment recommendations. Using novel data on such FinTechs and investors' internet history, we evaluate their relationship with investors' behavior, traditional information producers, and market efficiency. We find a significant substitution between the investors' use of traditional information sources and FinTechs. Second, an associated crowd-out effect reduces the quality of the information provided by sell-side analysts, the traditional information producers, suggesting investors are prudent to look to FinTechs for investment ideas. Finally, the introduction and increased use of these FinTechs result in an overall increase in price informativeness.