Breaking Barriers to Financial Access: Cross-Platform Digital Payments and Credit Markets

Shashwat Alok, Pulak Ghosh, Nirupama Kulkarni and Manju Puri

No 33259, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Can cross-platform digital payments improve credit access at scale? We study this question using India’s launch of the Unified Payments Interface (UPI), a nationwide cross-platform payment system. Using rarely available data on the universe of consumer loans, we show that digital payments increased financial deepening, allowing new borrowers to access formal credit. Banks mainly expanded lending to prime borrowers, while fintechs served all borrower segments—but only fintechs extended credit to new-to-credit customers. Credit growth was strongest in regions with affordable internet and recent bank account penetration. We find no evidence that this expansion increased default rates.

JEL-codes: D14 G24 G28 G51 J15 R21 R23 R31 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-pay
Note: CF DEV LE ME PE
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