Why Did Small Business Fintech Lending Dry Up during March 2020?

Itzhak Ben-David, Mark J. Johnson and Rene M. Stulz
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Mark J. Johnson: Brigham Young University
Rene M. Stulz: Ohio State University and European Corporate Governance Institute

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: With the onset of the COVID-19 crisis in March 2020, small business lending through fintech lenders collapsed. We explore the reasons for the market shutdown using detailed data about loan applications, offers, and take-up from a major small business fintech credit platform. We document that while the number of loan applications increased sharply early in March 2020, the supply of credit collapsed as online lenders dropped from the platform and the likelihood of applicants receiving loan offers fell precipitously. Our analysis shows that the drying up of the loan supply is most consistent with fintech lenders becoming financially constrained and losing their ability to fund new loans.

JEL-codes: G11 G21 G33 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-pay
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Citations: View citations in EconPapers (7)

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https://dx.doi.org/10.2139/ssrn.3910549

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2021-14

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