Do fintech lenders penetrate areas that are underserved by traditional banks?

By Julapa Jagtiani, Catharine M. Lemieux. Journal of Economics and Business, 2018

427 citations recorded by the source corpus.

Fintech has been playing an increasing role in shaping financial and banking landscapes. In this paper, we use account-level data from LendingClub and Y-14M data reported by U.S. banks with assets over $50 billion to examine whether the fintech lending platform could expand credit access to consumers. We find that LendingClub’s consumer lending activities have penetrated areas that may be underserved by traditional banks, such as in highly concentrated markets and areas that have fewer bank branches per capita. We also find that the portion of LendingClub loans increases in areas where the local economy is not performing well.

Subfields: Economics and Econometrics, Finance, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/ec24c2baec3135c43f0fa903587864cde589220b

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Citations in the corpus

The roles of alternative data and machine learning in fintech lending: Evidence from the LendingClub consumer platform (2019, background): “As of 2015, about 90 percent of LendingClub consumer loans are specified as being used to pay off credit card balances or for debt consolidation, as shown in Jagtiani and Lemieux (2018). 8 We note that these data are constrained by the limited number of reporters and thus may not represent the entir”
BigTech and the changing structure of financial intermediation (2019, neutral): “Similar results have been found for Germany by De Roure et al. (2016), and for the US by Tang (2018) and Jagtiani and Lemieux (2018b) with regard to broader FinTech credit.”
Fintech Credit Markets Around the World: Size, Drivers and Policy Issues (2018, background): “…tend to assess a much wider array of data than other lenders typically do, including non-traditional sources such as information from online spending behaviour or social media (US Department of the Treasury (2016), Jagtiani and Lemieux (2018b)) as well as digital footprints (Berg et al (2018)).”