Financial technology in developing economies: A note on digital lending in Turkey

Hakkı Deniz Karaman, Tanseli Savaser, Murat Tiniç and Gunseli Tumer-Alkan

Economics Letters, 2021, vol. 207, issue C

Abstract: We examine the differences in the loan performance of fintech and bank borrowers in Turkey. Using data of 5.5 million consumer loans by the fifth-largest private commercial bank in Turkey and its fintech subsidiary, we demonstrate that fintech borrowers are on average younger, better educated, have higher income and savings levels, pay less interest and have better credit history than traditional bank borrowers. Furthermore, fintech borrowers are less likely to default. Superior performance of fintech loans is driven by the fintech firm’s ability to identify creditworthy borrowers among individuals with low-credit scores. These results contrast with the earlier evidence for developed markets where fintech borrowers are found to be more risky.

Keywords: Digital lending; Innovation; Financial technology; Consumer loans (search for similar items in EconPapers)
JEL-codes: G21 G23 G24 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521002895

DOI: 10.1016/j.econlet.2021.110012

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