The real effects of FinTech lending on SMEs: Evidence from loan applications

Arbeitspapier

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 exibility, reduce their bank dependence and exposure to banking shocks.

Object Details

• ISBN: 978-92-899-4972-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2639

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Technological Change: Choices and Consequences; Diffusion Processes
• Subject: FinTech ; Small business lending ; Firm growth ; Debt structure ; Bank relationships

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eça, Afonso ; Ferreira, Miguel A. ; Prado, Melissa Porras ; Rizzo, Emanuele
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2022

Further information

• DOI: doi:10.2866/992620
• Handle: http://hdl.handle.net/10419/261173
• Last update: 10.03.2025, 11:43 AM CET