Financial Technologies and Market Volatility: Dynamic Connectedness between FinTech and Traditional Markets

Levent Sezal

doi:10.2478/jcbtp-2026-0024

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Financial Technologies and Market Volatility: Dynamic Connectedness between FinTech and Traditional Markets

Journal of Central Banking Theory and Practice

Volume 15 (2026): Issue 3 (September 2026)

By: Levent Sezal

Open Access

|Aug 2026

Abstract

This study examines the dynamic volatility spillover between financial technologies and traditional and alternative financial markets. The analysis utilizes daily data covering the period from January 2018 to March 2026 for FinTech ETFs, the Nasdaq, Bitcoin, and gold markets. Interconnectivity among financial markets was analyzed using the time-varying parameter VAR (TVP-VAR) connectedness approach. The findings indicate the presence of a moderate and time-varying connectivity structure among the markets. In particular, a strong interaction was observed between the FinTech and Nasdaq markets, while Bitcoin was found to play a significant role as a volatility transmitter during certain periods. The gold market, on the other hand, generally exhibited more stable and limited interactions. Additionally, the study found that financial market linkages increase during periods of crisis and uncertainty. These results highlight that the transmission of volatility across financial markets has a dynamic structure and that portfolio diversification strategies should be evaluated accordingly. By examining FinTech markets alongside other major asset classes, the study provides a timely and comprehensive contribution to the literature.

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