Decoding the Digital Finance Revolution: How BigTechs, FinTechs and Crypto-Assets Shape Financial Systemic Risk in US and EU
Domenico Curcio, Simona D’Amico, Iftekhar Hasan, Davide Vioto
Journal of International Money and Finance,
Vol. 161 (February),
2026
Abstract
Using a market-indicator-based approach, this paper empirically examines whether the stability of the US and EU financial systems is affected by the digital finance revolution driven by BigTechs, FinTechs, and crypto-assets. These three sectors display different downside volatility profiles, with financial intermediaries being particularly sensitive to shocks from the crypto ecosystem only under extremely severe downturns, which are prevented in regulated equity markets. In that vein, we provide evidence that the Markets in Crypto Assets Regulation reduced financial systemic risk in EU. Overall, our empirical analysis shows that markets perceive the performance and riskiness of tech-driven companies and assets in differentiated ways, and that the transmission of shocks from digital finance ecosystems operates uniquely under varying conditions of systemic stress. Finally, we also document asymmetric spillover effects between advanced and emerging economies, with shock transmission from the US and EU to emerging markets being systematically stronger than in the reverse direction.
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