The real effects of FinTech lending on SMEs: Evidence from loan applications

Afonso Eca, Miguel A. Ferreira, Melissa Porras Prado (melissa.prado@novasbe.pt) and A. Emanuele Rizzo

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We examine the effects of FinTech lending on firm policies using proprietary data on loan applications and loans granted from a peer-to-business platform. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms access FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that firms with access to FinTech loans significantly increase investment, employment, and sales growth relative to firms that get their loan application rejected. We identify these effects by exploiting the number of banks in each municipality as a source of exogenous variation in the probability of obtaining a FinTech loan. Our findings suggest that FinTech allows firms to improve their financial flexibility and reduce bank dependence.

Keywords: FinTech; SMEs; Small business lending; Lending relationships; Firm growth; Investment; Leverage; Debt structure (search for similar items in EconPapers)
JEL-codes: G21 G23 O33 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-pay and nep-sbm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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