Can FinTech reduce disparities in access to finance? Evidence from the Paycheck Protection Program

Isil Erel and Jack Liebersohn

Journal of Financial Economics, 2022, vol. 146, issue 1, 90-118

Abstract: New technology promises to expand the supply of financial services to small businesses poorly served by banks. Does it succeed? We study the response of FinTech to financial services demand created by the introduction of the Paycheck Protection Program. FinTech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and more minority households, and in industries with fewer banking relationships. It is also greater in counties where the economic effects of the COVID-19 pandemic were more severe. Substitution between FinTech and banks is economically small, implying that FinTech mostly expands, rather than redistributes, the supply of financial services.

Keywords: Financial technology; PPP; Coronavirus; Financial inclusion; Nonbank; Online bank (search for similar items in EconPapers)
JEL-codes: E6 G21 G23 G28 G38 H25 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:146:y:2022:i:1:p:90-118

DOI: 10.1016/j.jfineco.2022.05.004

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