Working Paper: CEPR ID: DP16668
Authors: Tobias Berg; Andreas Fuster; Manju Puri
Abstract: In this paper, we review the growing literature on FinTech lending –- the provision of credit facilitated by technology that improves the customer-lender interaction or lenders’ screening and monitoring of borrowers. FinTech lending has grown rapidly, though in developed economies like the U.S. it still only accounts for a small share of total credit. An increase in convenience and speed appears to have been more central to FinTech lending’s growth than improved screening or monitoring, though there is certainly potential for the latter, as is the case for increased financial inclusion. The COVID-19 pandemic has shown potential vulnerabilities of FinTech lenders, although in certain segments they have displayed rapid growth.
Keywords: fintech lending; financial intermediation; covid-19
JEL Codes: G21; G23; G51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fintech lending growth (G21) | increased convenience and speed (L81) |
| increased convenience and speed (L81) | fintech lending growth (G21) |
| fintech lenders (G21) | expanded credit access (H81) |
| COVID-19 pandemic (H12) | fintech lenders market share (G21) |
| algorithmic lending (G21) | reduced biases (D91) |
| reduced biases (D91) | more equitable credit access for minority groups (J15) |
| fintech lenders in areas with fewer bank branches (G21) | increased market shares (L19) |
| fintech lenders among lower-income borrowers (G21) | increased market shares (L19) |