Abstract
FinTech innovations are one of strategic decisions to increase the profitability of a company. This study determines the level of profitability of companies before and after the emergence of FinTech products. The authors focused on companies that have launched FinTech products and published their financial reports. The study sample consisted of 17 FinTech products from 16 companies in Indonesia. The limited number of the sample was caused by not all of them having published its financial reports, while we have checked 157 FinTech companies. An event study approach using paired sample T-test is utilized. The period used in this study is four years, covering two years before and two years after the company launched FinTech products. Data were obtained from IDX, FinTech.id, and company web-pages. The results clearly showed that there was a significant influence on return on assets (ROA), but no significant difference in return on equity (ROE). This finding gives more contribution to the FinTech industry about the company’s profitability impact of launching FinTech product.
Highlights
The use of the internet as a means for communication since the beginning of 2018 was recorded to have touched the figure of 4 billion or more than 53% of the total population of the world (We Are Social, 2018)
Eral, FinTech in Indonesia is regulated by a number of different authorities: Bank Indonesia, the return on assets (ROA) refers to profitability and operational efficien- Financial Services Authority, and the Ministry of cy
Total assets themselves consist of liabilities corporate profits is, because the profit obtained and equity, whereas return on equity (ROE) re- from testing is based on income other than flects the company’s ability to use its capital from FinTech products (Gomber et al, 2017; Iman, the owner’s deposit and retained earnings (Brealey 2018b; Ng & Kwok, 2017)
Summary
The use of the internet as a means for communication since the beginning of 2018 was recorded to have touched the figure of 4 billion or more than 53% of the total population of the world (We Are Social, 2018). Eral, FinTech in Indonesia is regulated by a number of different authorities: Bank Indonesia, the ROA refers to profitability and operational efficien- Financial Services Authority, and the Ministry of cy. Bank Indonesia ability to generate net income with equity owned Regulation Number 20/6/PBI/2018 Concerning (Gitman & Zutter, 2011). Calculated by means of net income divided by eq- released the Financial Services Authority uity Financial slack in these terms represents ex- Regulation Number 19/POJK.03/2014 Concerning cess company’s financial resources that came from Financial Services Without Offices in the Context profit, and as a result, the agents were given more of Inclusive Finance. Bank Indonesia supervises and regulates launching is still relatively new (2015–2017), so it FinTech in the payment sector, while the Financial cannot be scrutiny analyzed, because their annual.
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