The Rise of Finance Companies and FinTech Lenders in Small Business Lending

By M. Gopal, Philipp Schnabl. Social Science Research Network, 2020

195 citations recorded by the source corpus.

We document that finance companies and FinTech lenders increased lending to small businesses after the 2008 financial crisis. We show that most of the increase substituted for a reduction in bank lending. In counties in which banks had a larger market share before the crisis, finance companies and FinTech lenders increased their lending more. We find no effect of reduced bank lending on employment, wages, and new business creation by 2016. Our results suggest that finance companies and FinTech lenders are major suppliers of credit to small businesses and played an important role in the recovery from the 2008 financial crisis.

Subfields: Economics and Econometrics, Finance, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/8fd8514b91c98394bd471c081d766cbfecfd55cb

Citations in the corpus

• The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (2020, unknown): “However, the SSBF has not been conducted since 2003, and the financing sources of small businesses have significantly changed since that time with a decline in bank lending and a rise in nonbank sources of financing, such as finance companies and FinTech lenders (Gopal and Schnabl 2021).”