Download This PaperMortgage Lending through a FinTech Web Platform. The Roles of Competition, Diversification, and Automation.
70 Pages Posted: 9 Aug 2019 Last revised: 5 Mar 2024
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Mortgage Lending through a FinTech Web Platform. The Roles of Competition, Diversification, and Automation.
The Geography of Mortgage Lending in Times of FinTech
Date Written: August 9, 2019
Abstract
How do banks offer and price mortgages when an online platform enables them to reach regions where they have no branches? With unique data on responses from differently located banks to each applying household and a shift-share instrument for market concentration, we find banks to make more and cheaper offers to more concentrated local markets. We rationalize this as investments in lucrative market shares given customer switching costs. Banks also improve their inter-regional portfolio diversification with more attractive offers to regions more complementary to their home locales. Finally, banks` choices become increasingly automated, reducing their operating costs.
Keywords: Mortgage Lending, Spatial Competition, Multi-Product Pricing, Cross-Selling, Switching Costs, Complementary Demand, Bartik Instrument, Shift-Share Instrument, Credit Risk, Diversification, Automation, FinTech
JEL Classification: G2, L1
Suggested Citation: Suggested Citation
Swiss Finance Institute
c/o University of Geneva
40 Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
Swiss Finance Institute
c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland