The purpose of this study is to evaluate how financial technology (FinTech) affected the financial landscape of African markets in recent crisis. Existing literature highlights the growing interplay between FinTech, technological innovation (NEX) and stock market performance, particularly during periods of global uncertainty.
The current study empirically scrutinizes the volatility spillover and connectedness among FinTech, technological innovation and African stock returns from May 1, 2019, to February 14, 2024 using the connectedness approach (TVP-VAR) model. The authors specifically focus on critical events such as the COVID-19 pandemic and the Russia–Ukraine conflict to analyze the interconnectedness among these variables.
The findings show a strong connectivity among FinTech, innovation technology index and African stock market returns during the COVID-19 pandemic and the Russia–Ukraine conflict. The study demonstrates how the Egypt Exchange (EGY), Kenya (KEY), Tanzania (TAZ), Johannesburg Stock Exchange (SA) and technological innovation (NEX) are the largest transmitters of volatility spillovers during the COVID-19 pandemic, while FinTech, Nigeria Stock Exchange (NAG), Morocco (MOR) and Tunisia Stock Exchange (TUN) are the biggest receivers of shocks. This study equally observes that the Tunisia Stock Exchange (TUN), Nigeria Stock Exchange (NAG) and FinTech transitioned from being net recipients to net transmitters of volatility during the Russia–Ukraine conflict and that the Johannesburg Stock Exchange (SA) and Egyptian Exchange (EGY) changed from net transmitters to net recipients of shocks.
By investigating the impact of FinTech and technological innovation effects on African stock returns, particularly during crises, this study provides further insights into how these factors influence market resilience and spillover volatility in the face of shock disruptions. This has significant implications for investors, industry leaders and policymakers in developing an efficient investment diversification strategy.
