 Big tech credit score and default risk ——Evidence from loan-level data of a representative microfinance company in ChinaYingwei Dong, Qin Gou and Han Qiu China Economic Review, 2023, vol. 81, issue C Abstract: Using a unique loan-level dataset from a representative microfinance company in China, this paper investigates the information spillover effect of big tech credit scores on microloan risk management. We analyze a quasi-natural experiment where the microfinance company integrated big tech credit scores into its loan decision-making process. Our findings indicate that incorporating fintech information into risk assessments significantly lowers the default rate for new borrowers compared to existing ones. This effect is more pronounced for borrowers with insufficient collateral, higher loan demand, and medium risk levels, as well as for branches with higher historical default rates. Additionally, we observe a slight reduction in approved loan amounts for borrowers with medium risk levels, suggesting that big tech information contributes to more prudent loan decisions in microfinance. Keywords: Big tech; Microfinance; Credit risk management (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:81:y:2023:i:c:s1043951x23000950 DOI: 10.1016/j.chieco.2023.102010 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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