Brief Insights from PEF Research

FinTech: A Glimpse into the Future of the

Financial Sector

PR

IVATE EQUITY FORU

M

JUSTUS-LIEB IG -U N IV ERSIT

ÄT

PRIVATE EQUITY FORUM AT JUSTUS LIEBIG UNIVERSITY

Brief Insights from PEF Research 2

FinTech: A Glimpse into the Future of the Financial Sector

“Silicon Valley is coming. There are hundreds of start-ups with a lot of

brains and money working on various alternatives to traditional banking.”

– Jamie Dimon (CEO, J.P. Morgan Chase & Co.)

The term “FinTech” – short for “Financial Tech-

nology” – covered many headlines of reports

and analyses on the financial sector in recent

years. It deals with technologically improved

applications, processes, products, and services

of the financial industry reaching from digital

currencies to regulatory technology (Dorfleit-

ner et al., 2017; Kawai, 2016). Especially for

communities in developing countries, FinTech

can pave the way out of poverty by enabling

the “unbanked” population to become finan-

cially included (Demirguc-Kunt et al., 2018;

Vives, 2017). However, according to Demirguc-

Kunt et al. (2018), about 1.7 bn adults are still

unbanked. Yet 1.1 bn of them have a mobile

phone, demonstrating the extent of financial

inclusion if access to the internet and to mobile

banking is made possible.

Besides that, FinTech can also introduce the al-

ready “banked” population to more efficient

ways to use financial services (Vives, 2017). Ba-

zot (2017) shows that the unit cost of financial

intermediation in Germany has stagnated

1 More detailed information on the loss of trust in banks and the financial system can be found in Edel-man Trust Barometer Global Reports and Hurley et al. (2014).

around 2% in the period of 1950 – 2007. Philip-

pon (2015, 2016) argues that the improve-

ments in the information technology has bene-

fitted the financial sector as a whole but the

progresses have not trickled down to the end

users. He also finds similar rates for US market,

analyzing the period between 1986 and 2015.

Corruption as well as transaction costs and fi-

nancial risks can be reduced by the increase of

transparency and speed, creating economic

welfare (Demertzis et al., 2018; Demirguc-Kunt

et al., 2018; Dorfleitner et al., 2017; Karlan et

al., 2016; Vives, 2017).

The financial crisis of 2007/08, which led to a

loss of trust in banks and the prevailing finan-

cial system inter alia, fueled the conception of

a decentralized banking system detached from

all kinds of financial intermediaries.1 The eu-

phoria about this topic and the rise of peer-to-

peer lending platforms even led to the debate

of a world with banking without banks (see e.g.

The Economist, 2014). Banks, insurers, and

other incumbent financial service providers

PRIVATE EQUITY FORUM AT JUSTUS LIEBIG UNIVERSITY December 2018

FinTech: A Glimpse into the

Future of the Financial Sector

Alireza Emadi & Thomas Heyden

Brief Insights from PEF Research 3

FinTech: A Glimpse into the Future of the Financial Sector

around the globe recognized the need for inno-

vative ideas and more efficient and cost reduc-

ing solutions to stay competitive towards the

new market players in today’s highly regulated

financial system. The main challenge from the

viewpoint of governments and regulators for

the near future will be to improve the regula-

tory framework in a way that more financial

stability is made possible without negatively in-

fluencing competition (Philippon, 2016).

In this white paper, we provide a glimpse into

the future of the financial sector and discuss

the drivers, hurdles, and trends for the German

FinTech market in particular.

FinTech Definition

There is no uniform definition of the term

“FinTech”, yet. Many definitions use the word

“FinTech” to describe “a FinTech company”.

However, we differentiate between these two

notions. A FinTech company in our conception

uses technological know-how with the main

purpose of serving the financial industry by in-

novating the distribution of financial prod-

ucts/services, providing innovative financial

products/services, and enabling the provision

of innovative financial products/services.

FinTech companies are primarily but not exclu-

sively start-ups2. Moreover, established finan-

cial service providers as well as tech companies

without the main purpose of changing the fi-

nancial industry can offer FinTech-based solu-

tions. Therefore, all these players are partici-

pating and competing more or less in the same

market – some with the full scope of their busi-

ness and others only with the respective divi-

sions – and cannot be excluded (Comdirect,

2017; Demertzis et al., 2018; Dorfleitner et al.,

2017; Ernst & Young, 2017; Kawai, 2016; Oliver

Wyman, 2018).

According to Oliver Wyman (2018), Carney

(2017), and the definition above, FinTech com-

panies can be classified into six different types:

(1) Neo-Banks, (2) Marketplaces & Aggrega-

2 We define start-ups as young companies (max. 10 years) with high expectancies of growth in the near future.

tors, (3) Product-specific Marketplaces & Ag-

gregators, (4) Product Specialists, (5) Banking

Service Providers, and (6) Bank Platforms.

(1) Neo-Banks

Neo-Banks or Smartphone-Banks can be con-

sidered as full-featured banks, which enable

real-time banking through the use of mobile

devices. The crucial point is that not only the

products but also the entire value chain of an

ordinary bank has been innovated (e.g. N26).

(2) Marketplaces & Aggregators

FinTech companies belonging to this classifica-

tion provide two-sided e-marketplaces and/or

work as aggregators of different financial prod-

ucts/services. The end user is usually able to

vary different parameters according to his pref-

erences on those platforms and compare the

various offerings of the providers. These com-

panies do not offer the products themselves;

they only distribute them (e.g. CHECK24).

(3) Product-specific Marketplaces & Aggrega-

tors

Similar to the classification above, these

FinTech companies operate closely to the end

Brief Insights from PEF Research 4

FinTech: A Glimpse into the Future of the Financial Sector

user. The only difference is that they are spe-

cialized on a certain product/service (e.g.

Zinspilot).

(4) Product Specialists

Since FinTech companies of this field are con-

sidered “Product Specialists”, they are special-

ized on a specific product (e.g. Auxmoney:

peer-to-peer lending). The technological infra-

structure as well as the distribution of the prod-

uct can be provided by third parties or can be

realized by the “Product Specialists” them-

selves.

(5) Banking Service Providers

Classifying FinTech companies as “Banking Ser-

vice Providers” means that their main purpose

is to serve as technological enablers for banks,

insurers, and other FinTech companies that of-

fer products/services and/or distribute them

(e.g. Figo).

(6) Bank Platforms

Operating according to this classification,

FinTech companies allow third parties to create

their own banking products/services by provid-

ing the necessary infrastructure behind those

(e.g. solarisBank).

Segments and their Dynamics

For Germany, the data shows that the total

number of banks is shrinking whereas the num-

ber of newly founded FinTech companies has

been increasing since 2007:

Now, the growth rate of FinTech start-up foun-

dation is expected to slow down on a high level

3 Note that the number of FinTech start-ups may dif-fer from report to report due to varying definitions.

with an average growth rate across all seg-

ments of about 7%. Many of them emerged in

every segment, some of them even created

whole financial ecosystems (see e.g. N26).

Around 793 are based in Germany until the end

of September 2018, representing a total

growth of 21% since 2016. However, the high-

est density of start-up foundations per week is

still measured for the year 2016 with almost

three per week (Clairfield International, 2018;

Comdirect, 2017, 2018; Bundesbank, 2009,

2012, 2015, 2018).3

FinTech companies can operate in various seg-

ments of the financial industry. The main seg-

ments include: financing, payments, real estate

(PropTech), insurance (InsurTech), regulatory

(RegTech), and investments (InvesTech). It is

important to note that FinTech companies can

belong to multiple classifications and/or can

work cross-segmental (Comdirect, 2017; Ernst

& Young, 2017; Oliver Wyman, 2018).

However, the key trends are consistent across the different approaches.

0

100

200

300

400

500

600

700

800

0

500

1,000

1,500

2,000

2,500

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Banks FinTech companies

Source: Barkow Consulting, Comdirect, Deutsche Bundesbank

1 Number of banks and growth of FinTechs

Brief Insights from PEF Research 5

FinTech: A Glimpse into the Future of the Financial Sector

By taking a closer look on the number of

FinTech start-ups based in Germany – including

all possible classifications – in the respective

segments, it becomes apparent that FinTech

start-ups operating primarily in the area of real

estate (PropTech) dominate the field. Accord-

ing to Comdirect (2018), about 24% of the ob-

served 793 FinTech start-ups were PropTechs.

The second place goes to start-ups that mainly

belong to the financing segment with a total

share of approximately 20%. InsurTech start-

ups have also made it to the podium, account-

ing for about 11%. The rest of the field is quite

fragmented with shares close to or below 10%.

Especially PropTech and RegTech are gaining

the attention of young start-ups in recent

years, which anticipate great business opportu-

nities in those areas due to a stable real estate

market in Germany and the more stringent reg-

ulatory requirements for the financial sector.

However, the deal sizes for RegTechs in Europe

are relatively small compared to the other

FinTech segments. Nevertheless, in terms of

scope the efforts are exceptional, especially in

the UK (Ernst & Young, 2017; KPMG, 2018). The

InsurTech segment should not be neglected as

start-up activity in this segment is growing

above average (21%) in Germany. Comdirect

(2018) identifies a 26% growth for the Insur-

Tech segment whereas PropTech has grown by

15% since 2016.

FinTech Hubs and their Drivers

A FinTech hub is a geographical location with

increased activity in the interface between fi-

nance and technology. After a certain period,

hubs usually develop their own characteristics

due to various aspects (e.g. cultural environ-

ment) and grow in size.

Following Deloitte (2017), we discuss four key

factors, which affect the formation, growth,

and success of those hubs and position the Ger-

man FinTech market in this context:

(1) Policy & Regulation

The regulatory framework is not only crucial for

a stable financial system, it also plays an im-

portant role concerning the decision on the

place of business from an entrepreneurial per-

spective. The financial landscape of the EU has

been dominated by traditional banks for dec-

ades and is changing very slowly. Their domi-

nance is often justified by their long history and

4 For more insights on the inverse U-shaped rela-tionship between competition and innovation, please refer to Aghion et al. (2005). We recommend Blind (2012) for in-depth information on the effects

the regulatory and supervisory environment,

which is suited particularly to them and shaped

them over the years (Demertzis et al., 2018).

On the one hand, higher regulatory require-

ments might conflict with the entrepreneurial

spirit, hinder market entries, and restrict the

cooperation between companies (i.e. in re-

search and development) resulting in an overall

slowdown of innovation. In that case, espe-

cially FinTech start-ups would shift their busi-

nesses to areas with lower regulatory require-

ments since they are more flexible and have a

greater risk affinity than the already estab-

lished companies (Philippon, 2016). On the

other hand, regulatory burdens can guard the

existing market players from too much compe-

tition and therefore allow them to generate

profits to finance their innovations.4 Therefore,

governments’ and regulators’ task should be to

of different types of regulation on innovation. His analysis covers 21 OECD countries in the period be-tween 1998 and 2004.

Brief Insights from PEF Research 6

FinTech: A Glimpse into the Future of the Financial Sector

reduce regulatory arbitrage, create healthy en-

vironments where entrepreneurialism is pro-

moted without allowing innovation-reducing

market structures, and to develop forward-

looking regulatory frameworks that are aligned

with the dynamics of our technological era (Li

et al., 2017).5 Demertzis et al. (2018) recom-

mend focusing on the consumer’s interest

while creating the required regulatory frame-

work, since the FinTech innovation is primarily

consumer-driven, implying that its success’ as

well as failures are to a large extent absorbed

by the consumers. The regulatory bodies of the

UK and Singapore could be role models. Their

progressiveness has been rewarded as they are

one of the important leaders in the FinTech in-

dustry.

By launching the FinCamp events the German

Finance Ministry took actions to encourage the

idea exchange between all parties including the

Finance Ministry, the Deutsche Bundesbank,

the Federal Financial Supervisory Authority,

FinTech start-ups, and banks. The Federal Fi-

nancial Supervisory Authority also imple-

mented a new department called “Financial

Technology Innovations” that discusses the

regulatory aspects and the upcoming issues of

the changing financial environment. But a “reg-

ulatory sandbox” has still not been imple-

mented to test innovations in a safe environ-

ment (Ernst & Young, 2017). Considering this

progress, Germany’s regulatory authorities and

the government are on a good path. However,

comparing Germany to other established finan-

cial centers still leaves plenty of room for im-

provement.

(2) Demand & Risk Affinity

Areas with well-established financial systems

are more likely to attract FinTech companies

since a broader population is already familiar

with improved financial products/services. Fur-

thermore, the risk affinity to changes plays a

major role. If the population and the institu-

tions tend to stick to their old habits, the cost

5 Philippon (2016) outlines further guidelines for FinTech regulation covering various aspects.

of convincing (marketing) might exceed the

costs of moving elsewhere if budget is limited.

Beyond that, more intense competition among

the established financial institutions and there-

fore a greater demand for innovative ideas to

increase market shares can create lucrative

business opportunities for FinTech companies.

Especially B2B-oriented FinTech companies

that can boost the incumbents’ efficiency (e.g.

usability of digital banking apps) and reduce

their processing costs profit from this situation

since they appeal less threatening to them.

About 51% of the payments at the point of sale

in Germany in 2016 have been done by paying

cash. 46% of the transactions are card-based

(EHI Retail Institute, 2017). A survey of the

Deutsche Bundesbank (2017) shows that, espe-

cially among the younger generations (age 18-

24), digital payment alternatives are getting

popular. However, 88% of the participants in

the survey would like to be able to pay with

cash in the future and do not prefer the total

abolition. In comparison to Germany, the Chi-

nese payment behavior is significantly mobile-

based (56%) and offered by third-party compa-

nies like Alibaba (Alipay/AntFinancial) and Ten-

cent (WeChat). Paying with cash plays only a

limited role (18%) in China (Korella and Li,

2018).

(3) Capital

Access to capital is needed to innovate and

grow in scale and scope. Therefore, FinTech

start-ups are emerging in areas where they can

raise money easily. As the start-up business is

quite risky, the immature FinTech companies

are financed primarily with equity capital from

angel investors, venture capital (VC), and pri-

vate equity (PE) firms. Government and corpo-

rate institutions might also participate in later

fundraising stages. By reaching a specific size,

some of the FinTech companies even go public

Brief Insights from PEF Research 7

FinTech: A Glimpse into the Future of the Financial Sector

whereas the main investors initiate their exits

(e.g. Wirecard AG).

Besides the inflows in the FinTech companies

themselves, it is also important to invest in

pitch deck events, networking possibilities, and

panel discussions to improve the dialog be-

tween all parties, including the government

and regulators, the incumbents (usually banks

and insurance companies), and entrants

(FinTech companies). The knowledge diffusion

is a crucial factor for the success of those hubs.

From a regulatory perspective, investments in

“regulatory sandboxes” should be considered,

at least as a short-term solution, since they al-

low the FinTech companies to test their new in-

novations in a safe environment (Demertzis et

al., 2018)

(4) Talent Acquisition & Recruiting

Finally yet importantly, it is indispensable to ac-

quire and retain the right staff. The key attrib-

utes that should be brought to the table are fi-

nancial expertise, technological expertise, and

entrepreneurial spirit. Particularly on the gov-

ernment level, decisions on simplifying the en-

try for professionals should be considered since

a diverse team of entrepreneurs can be a huge

advantage, especially for the international ex-

pansion. Furthermore, increasing investments

in the education system and new education

programs (e.g. Applied Data Science) are essen-

tial to keep up with the pace of our technolog-

ical era.

If most of the mentioned aspects would be

taken into account it is likely that the estab-

lished hubs feed themselves by attracting more

and more innovative minds, resulting in an

overall positive feedback loop.

A significant number of FinTech start-ups are

still located in the capital of Germany, Berlin.

According to Comdirect (2017), in 2017, Berlin

had more FinTech start-ups than Frankfurt and

Munich combined, who shared the second

place. Other FinTech centers are emerging

around Hamburg, Cologne, Düsseldorf, and

Leipzig. However, the top three hubs were

home to >70% of the total FinTech start-ups

and responsible for about 78% of new FinTech

start-ups for the period of 2015 – 2017. This

trend underlines the self-fulfilling prophecy of

well-working FinTech hubs as mentioned

above.

Considering the upcoming results concerning

the negotiations between the EU and the UK on

the Brexit issue, Frankfurt is receiving increas-

ing attention, which is likely to strengthen its

second place or might pave the way for the

pole position. Some signals for improving the

financial center in Germany have been given by

Chancellor Angela Merkel with her speech at

an event of the German Stock Exchange on

September 4th (Handelsblatt, 2018). Ernst &

Young (2017) identify six success factors in

2017 that could make the Rhine-Main-Neckar

region, led by Frankfurt, the capital of FinTech

activity in Germany. These factors include

funding, partners, coaching/training, regula-

tion, infrastructure, and events/networking.

Frankfurt’s strongest factors are its infrastruc-

ture and events/networking. Significant pro-

gress has been made in providing affordable

co-working spaces and in the transfer of

knowledge and content. Besides that, the part-

nership between the incumbents and the en-

trants improved as well. This might be due to

the fact that Frankfurt’s FinTech companies are

more focused in B2B-ortiented fields in which

the provision of the necessary technology is of

main interest. The access to funding has been

identified as the weakest factor as already es-

tablished hubs like Berlin and London mostly

attract investors. However, we do expect shifts

of capital flows.

Brief Insights from PEF Research 8

FinTech: A Glimpse into the Future of the Financial Sector

Investment Activity

Fewer FinTech start-up foundations, increasing

deal sizes, and total investment volumes are in-

dicating that the German FinTech market is on

a healthy path to slowly enter the maturity

phase. This transition is boosted by an increase

in investors’ confidence towards German-

based FinTech companies and a shift of atti-

tude towards collaboration from the incum-

bent viewpoint, who might also invest through

their VC arms (CVC). More successful FinTech

companies with rather strong customer bases

as well as established market players (primarily

banks) and tech companies are currently trying

to increase their dominance in the market

through cooperations and acquisitions. How-

ever, less successful FinTech start-ups will

simply fail and shut down their businesses due

to lacks of capital, unprofitability etc. or be-

come acquired in the near future. Additionally,

an increase in the number of VC exits is ex-

pected which is also one of the characteristics

for the upcoming stage of the industry life cy-

cle. Since investments in the FinTech market

are still quite risky, focusing primarily on VC

and PE inflows as well as M&A transaction vol-

umes should be an appropriate way to depict

the current market situation and future trends

(Barkow Consulting, 2018; Clairfield Interna-

tional, 2018; Comdirect, 2017; Ernst & Young,

2017).

VC investments in the German FinTech industry

are peaking at record heights every year. About

41% of the total VC investment of 2017 (€713

mn) have been made in the first quarter of

2018 (€295 mn). This amount was mainly

driven by the deals of N26 (approx. €130 mn),

solarisBank (approx. €57 mn), and smava (ap-

prox. €52 mn). 2018 is also a record year al-

ready, since a value of €778 mn has been

achieved in the first nine months of this year.

The largest share (25%) of the cumulated VC of

2017 – September 2018 has flown into the fi-

nancing segment followed by investments (In-

vesTech) (17%). Only 8% were attributed to

FinTech start-ups, which operate in the largest

of all segments in numerical terms, the real es-

tate (PropTech) segment (Barkow Consulting,

2018; Comdirect, 2018; Crunchbase; Finanz-

Szene, 2018).

However, on the international stage Germany’s

investment and transaction volume – taking

VC, PE, and M&A activities into account – in

FinTech industry are inconsiderably small com-

pared to the giant markets of China, the US,

and even to the market of its European neigh-

bor, the UK (Demertzis et al. 2018; KPMG,

2018; Vives, 2017). According to Clairfield In-

ternational (2018), there are three main rea-

sons for that phenomenon: (1) German FinTech

business models have not reached the stage of

development of their international competi-

tors6, (2) investors were still not convinced of

their performance and the relevance of their

business models, and (3) German investors are

more cautious.

6 Cross-border activity of FinTech companies in Eu-rope measured in terms of inflow and outflow funds are relatively low compared to the US and Chinese markets, suggesting that European FinTech compa-nies are still largely domestic (Demertzis et al.,

2018). However, the European FinTech market is becoming more attractive as can be seen in the large investment of Tencent in N26, among others.

Brief Insights from PEF Research 9

FinTech: A Glimpse into the Future of the Financial Sector

Complement or Substitute?

The question we try to answer based on the

gathered results is whether FinTech start-ups

will replace the existing market players in their

respective business segments or whether their

technologically improved applications, pro-

cesses, products, and services act as a comple-

ment when utilized jointly with the current

ones. Research on this topic is quite sparse, as

FinTech is more or less a recent development

and data is not readily available (Demertzis et

al., 2018).

Li et al. (2017) analyze the impact of FinTech

digital banking start-ups’ funding on the stock

returns of incumbent US retail banks. The fund-

ing was used as an indicator of the potential

values of the FinTech start-ups and was proxied

by the number of funding deals and the funding

volume. The funding volume and the number

of deals themselves were not statistically sig-

nificant. However, in terms of growth, the co-

efficients were significant and positively re-

lated to the stock returns of traditional retail

banks, implying complementarity and there-

fore an on average positive spillover effect off

digital banking start-ups (FinTech start-ups) on

traditional retail banks in the US. In addition to

their findings, the researchers draw attention

to a case of spurious correlation due to the in-

effective size of the FinTech start-ups7, the

counterbalancing of substitutable and comple-

mentary effects8, different customer bases (i.e.

“unbanked” population), and other limitations

concluding that the result of complementarity

is fragile.

Oliver Wyman (2018) identifies a negative ef-

fect of FinTech start-up activity on the earnings

potential of German retail banks. The total

earnings potential of the retail bank sector is

7 According to Clairfield International (2018), out of the 700 identified German FinTech companies, less than 2% are profitable. 8 On the one hand, FinTech start-ups have started to suck up segments of the financial industry and push

valued at €54 – 55 bn and total earnings loss

accounts for 2 – 3% of it. Approximately one

third of the total earnings loss occurs due to in-

direct effects, like the increase of transparency

through digital marketplaces etc. The rest is as-

signed to direct effects including, among oth-

ers, the shift of the customer base towards

Neo-Banks. However, especially FinTech com-

panies that implement marketplace and aggre-

gator functions will cause a headache for in-

cumbent retail banks in the near future as they

are responsible for about 60% of the expected

total earnings loss by 2022 (€2 bn).

By taking a closer look on how the established

financial institutions respond to the new mar-

ket players, it becomes apparent that the top

ten banks in Germany use multi-response ap-

proaches. Ernst & Young (2017) identifies that

investing in FinTech companies is the most pre-

ferred one, followed by collaboration. In con-

trast, boosting innovation in-house is quite

modest across those banks. This might be due

to the stiffness of the banking culture towards

entrepreneurialism and distance between the

innovator and the decision maker within the

company. However, the “uncertainty principle

of economic research” should be considered,

since participants in a survey might refuse to

answer (correctly) on sensible topics.

Taking all the reports and scientific evidence

into account, we believe that it is too early to

predict the result of this transition in the finan-

cial industry. However, it is undeniable that

FinTech companies are becoming a serious al-

ternative to avail financial services, especially

in Eastern Asia, but also in the US and the UK.

Established market players seem to recognize

the incumbents out of the respective segments; on the other hand, incumbents try to maintain their market power by acquiring, cooperating, and in-vesting in FinTech start-ups or start innovating themselves.

Brief Insights from PEF Research 10

FinTech: A Glimpse into the Future of the Financial Sector

the need for action and are trying to incorpo-

rate profitable FinTech start-ups through dif-

ferent response models.

Not only the interaction between the incum-

bents and the entrants will be interesting for

the near future, the interplay among the

FinTech companies themselves will also call for

excitement. For the German FinTech market, it

can be said that the market is slowly entering

the maturity phase, since investment volumes

are increasing whereas FinTech start-up foun-

dations are slowing down. German-based

FinTech companies are trying to catch up with

their international peers by attracting interna-

tional investors and using those additional

funds to expand their businesses across Ger-

man borders. Overall, more intense M&A activ-

ities, cooperation, and collaborations should

be expected, especially in more mature seg-

ments (e.g. payments). Moreover, regulatory

aspects will also play a key role concerning the

structure of the market, as mentioned above.

Government, regulators, and FinTech compa-

nies in Germany are working more closely to-

gether but in comparison to other giant

FinTech markets, there is still much room for

further improvements. Should technology

companies (e.g. Google, Apple, Amazon, Face-

book etc.) start to disrupt the market in full-

scale, going beyond their payment services (i.e.

Google Pay, Apple Pay etc.), this might erode

the financial system more drastically in the fu-

ture: They have incredibly large customer ba-

ses, are proficient in gathering and analyzing

data, and have more investment capital than

FinTech start-ups.

Brief Insights from PEF Research 11

FinTech: A Glimpse into the Future of the Financial Sector

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Appendix

About the authors:

Alireza Emadi is a student assistant at the Chair of Behavioral and Institutional Economics at Justus

Liebig University Giessen (JLU), Germany, and an active member of the Private Equity Forum at JLU.

He is about to finish his Bachlor's degree in Economics, majoring International Economics and Financial

Markets and Institutions.

E-Mail: Alireza.Emadi@wirtschaft.uni-giessen.de

Thomas Heyden is a research associate and Finance Ph.D. student at the Chair of Banking & Finance

at Justus Liebig University Giessen (JLU), Germany, and an active member of the Private Equity Forum

at JLU. He studied Economics and Mathematics in Giessen and Darmstadt, Germany, and holds a Mas-

ter’s degree in Economics, majoring Financial Markets and Institutions.

E-Mail: Thomas.Heyden@pef-jlu.de

Research publication from Private Equity Forum at Justus Liebig University (JLU). This paper is for information

purposes only and not intended for commercial use. Private Equity Forum at JLU is an officially recognized non-

profit organization connected to the Chair of Banking & Finance at JLU. The views expressed in this paper are

those of the authors.

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Version as per December 2018.

© 2018 - Private Equity Forum an der Justus-Liebig-Universität e.V.