Navigating Uncertainty: The Impact of FinTech Advancement, Economic Policy, and Social Media on the US Bank Stock Returns

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Abstract
This study explores how FinTech advancements, economic policy uncertainty (EPU), and social media sentiments affect bank stock returns in the United States. We analysed data from 338 listed banks between 2010 and 2022, using a two‐step Generalised Method of Moments estimator to address potential biases. Our findings show that EPU has the most significant negative impact on bank stock returns, highlighting the importance of stable policies for maintaining investor confidence. While FinTech advancements generally boost bank performance, they can temporarily hurt profitability due to initial costs and market scepticism. Positive social media sentiments, especially from platforms like Twitter, significantly enhance investor confidence and bank stock returns. However, when combined with high EPU, the positive effects of FinTech and social media are diminished, showing the density of these interactions. Robustness checks, including feasible generalised least squares and control variables such as unemployment, political stability, and the Z ‐Score, confirm the consistency of our results. This study provides valuable insights for policymakers, financial institutions, and researchers, emphasising the need for strategies that integrate technological, social and policy factors to support financial stability and market performance.

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