What is the role of FinTech lenders in small business lending markets? with Assistant Professor Huan Tang (LSE)
Using French administrative data, Huan will show that, relative to similar firms taking new bank loans, SMEs that take a FinTech loan to borrow 20% more from banks in the next two years. The effect is more pronounced for low-collateral firms and when the FinTech loan finances the acquisition of tangible assets. This is consistent with firms using uncollateralized FinTech loans to acquire assets that they can pledge to obtain bank loans. We also find evidence that firms use FinTech loans to meet urgent liquidity needs. In contrast, we find no evidence of a superior screening ability of FinTech lenders.