What is Fueling FinTech Lending? The Role of Banking Market Structure

73 Pages Posted: 16 Jul 2020

See all articles by Tetyana Balyuk

Tetyana Balyuk

Emory University - Goizueta Business School

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

John Hackney

University of South Carolina - Department of Finance

Date Written: June 23, 2020

Abstract

FinTech growth raises questions about its competitive advantages vis-à-vis traditional providers, the relative risks of FinTech products, and real economic effects. We study FinTech platform small business lending, yielding new answers that may apply to FinTech more generally. Findings suggest that FinTech tends to replace loans by large/out-of-market banks more than small/in-market banks. This is consistent with FinTech advantages in more efficient processing of hard information, rather than hardening of soft information. Additional results suggest that FinTech loans are relatively risky, but become safer after replacing bank loans. Both FinTech and bank loans are found to benefit the real economy.

Keywords: FinTech, large banks, lending technologies, small banks, small business lending

JEL Classification: G21, G23, O33

Suggested Citation

Balyuk, Tetyana and Berger, Allen N. and Hackney, John, What is Fueling FinTech Lending? The Role of Banking Market Structure (June 23, 2020). Available at SSRN: https://ssrn.com/abstract=3633907 or http://dx.doi.org/10.2139/ssrn.3633907

Tetyana Balyuk (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

John Hackney

University of South Carolina - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

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