The Real Effects of FinTech Lending on SMEs: Evidence from Loan Applications
48 Pages Posted: 15 Feb 2022
There are 4 versions of this paper
The Real Effects of FinTech Lending on SMEs: The Financial Flexibility Channel
The Real Effects of FinTech Lending on SMEs: Evidence from Loan Applications
The Real Effects of Fintech Lending on SMEs: Evidence from Loan Applications
The Real Effects of Fintech Lending on Smes: Evidence from Loan Applications
Date Written: February 1, 2022
Abstract
We show that FinTech lending affects credit markets and real economic activity using a unique data set of a Peer-to-Business platform for which we have the universe of loan applications. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms use FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that access to FinTech spurs firm growth, employment and investment relative to firms that get their loan application rejected. In addition, firms with access to FinTech increase leverage and substitute long-term bank debt with FinTech debt. Our findings suggest that FinTech allows firms to preserve financial flexibility, reduce their bank dependence and exposure to banking shocks.
Keywords: bank relationships, debt structure, FinTech, firm growth, small business lending
JEL Classification: G21, G23, O33
Suggested Citation: Suggested Citation