Implications of Fintech and High Frequency Trading (HFT) Developments on Capital Market Efficiency: A Systematic Literature Review
DOI:
https://doi.org/10.58812/wsaf.v3i03.2352Keywords:
FinTech, High-Frequency Trading, Market Efficiency, Capital Market, SLRAbstract
With the rapid development of digital technology, global capital markets are undergoing a major transformation through the emergence of Financial Technology (FinTech) and High-Frequency Trading (HFT). This study aims to examine how these two technologies affect capital market efficiency in various countries. The method used was a Systematic Literature Review (SLR), examining 27 scientific articles published between 2021 and 2025 relevant to the topics of FinTech, HFT, and market efficiency. The results show that the implementation of FinTech and HFT can increase liquidity, transaction speed, and price efficiency through the use of technologies such as trading algorithms, blockchain, and automated trading systems. However, in developing markets, their impact remains limited due to limited digital infrastructure, immature regulations, and low financial literacy. Therefore, technological readiness, adaptive governance, and strong regulations are critical factors in ensuring stable and sustainable market efficiency. The implications of this study provide new insights into the role of financial technology in strengthening market efficiency and serve as a basis for policymakers and researchers in developing future digital capital markets.
References
[1] S. Tian, W. Bai, and W. Shi, “Capital market opening and labour investment efficiency,” Econ. Res. istraživanja, vol. 36, no. 2, 2023.
[2] X. Yu and Y. Yu, “Does the Capital Market Opening Improve the Price Discovery Efficiency of Stock Market? An Empirical Research Based on Shanghai‐Hong Kong Stock Connect,” Math. Probl. Eng., vol. 2021, no. 1, p. 5658597, 2021.
[3] Y. Liu, W. Zhang, and B. Carter, “HIGH-FREQUENCY TRADING ALGORITHMS AND THEIR EFFECTS ON INTRADAY MARKET VOLATILITY,” 2025.
[4] J. Nahar, N. Nishat, A. S. M. Shoaib, and Q. Hossain, “Market efficiency and stability in the era of high-frequency trading: A comprehensive review,” Int. J. Bus. Econ., vol. 1, no. 3, pp. 1–13, 2024.
[5] G. P. M. Virgilio, “High-frequency trading: A literature review,” Financ. Mark. Portf. Manag., vol. 33, no. 2, pp. 183–208, 2019.
[6] M. Afdal, N. Natasya, N. A. Rahmadhani, and J. Hendra, “Peran Financial Technology (Fintech) Dalam Meningkatkan Partisipasi di Pasar Modal,” J. Bus. Inflat. Manag. Account., vol. 2, no. 1, pp. 281–290, 2025.
[7] D. Basu and A. Adhikari, “Using profits to re-estimate efficiency of internal capital markets,” IIMB Manag. Rev., vol. 35, no. 3, pp. 215–228, 2023.
[8] S. Wu, X. Pan, and F. Wang, “Can the synergy between FinTech and data element market development enhance credit allocation efficiency?,” Int. Rev. Econ. Financ., p. 104515, 2025.
[9] T. Feng, X. Dong, and Y. Wang, “Assessing the impact of digital transformation on capital market information efficiency under environmental uncertainty: Evidence from China,” PLoS One, vol. 19, no. 1, p. e0295187, 2024.
[10] Y. Zhao, J. W. Goodell, Y. Wang, and M. Z. Abedin, “Fintech, macroprudential policies and bank risk: Evidence from China,” Int. Rev. Financ. Anal., vol. 87, p. 102648, 2023.
[11] K. Shrestha, B. Naysary, and S. S. S. Philip, “Fintech market efficiency: A multifractal detrended fluctuation analysis,” Financ. Res. Lett., vol. 54, p. 103775, 2023.
[12] KPMG, “Pulse Of Fintech H2 2023,” KPMG International, 2024.
[13] N. Li, R. Yuan, M. A. Khan, X. Yang, N. Khaliq, and X. Zhang, “Does investors’ site visits improve the capital market pricing efficiency?,” Heliyon, vol. 9, no. 9, 2023.
[14] J. Brogaard, T. Hendershott, and R. Riordan, “High-frequency trading and price discovery,” Rev. Financ. Stud., vol. 27, no. 8, pp. 2267–2306, 2014.
[15] Z. Žáková Kroupová and G. Trnková, “Profitability, Efficiency, and Market Structure in the Meat and Milk Processing Industry: Evidence from Central Europe,” Int. J. Financ. Stud., vol. 13, no. 1, p. 45, 2025.
[16] D. Huang, A. Kou, C. Liu, and S. Liu, “The effect of PWS arrangements on M&A activities,” Financ. Res. Lett., vol. 52, p. 103614, 2023.
[17] N. Fu, L. Geng, J. Ma, and X. Ding, “Price, complexity, and mathematical model,” Mathematics, vol. 11, no. 13, p. 2883, 2023.
[18] R. Kumar, “India and the BRICS A Cautious and Limited Engagement,” Int. Stud., vol. 54, pp. 162–179, Jan. 2017, doi: 10.1177/0020881718777348.
[19] R. Ullan Awan, T. Akhtar, S. Rahim, S. And, and A. R. Cheema, “Governance, Corruption and Economic Growth: a Panel Data Analysis of Selected Saarc Countries,” Pak. Econ. Soc. Rev., vol. 56, no. 1, pp. 1–20, 2018.
[20] C. Desagre, F. Laly, and M. Petitjean, “Revisiting the trading activity of high-frequency trading firms around ultra-fast flash events,” Financ. Innov., vol. 11, no. 1, p. 68, 2025.
[21] K. Meng and S. Li, “The adaptive market hypothesis and high frequency trading,” PLoS One, vol. 16, no. 12, p. e0260724, 2021.
[22] N. Keya Otinga, P. Obi, and F. Mugo-Waweru, “The conditional effect of fintech on the linkage between financial inclusion and capital market development,” Cogent Econ. Financ., vol. 13, no. 1, p. 2541264, 2025.
[23] R. Bauer, I. Eberhardt, and P. Smeets, “A fistful of dollars: Financial incentives, peer information, and retirement savings,” Rev. Financ. Stud., vol. 35, no. 6, pp. 2981–3020, 2022.
[24] Y. Liu, A. Abdul Rahman, S. Imna Mohd Amin, and R. Ja’afar, “Navigating fintech and banking risks: insights from a systematic literature review,” Humanit. Soc. Sci. Commun., vol. 12, no. 1, pp. 1–16, 2025.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Annesa Tasya Maghfirah
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Facebook 
Instagram 
Twitter 
Youtube 
westscience.journals@gmail.com