Globalization blueprint and households’ fintech debt: Evidence from China’s One Belt One Road initiative

Yun Zhang, Yun Liu, Yifei Zhang () and Xin Chen

International Review of Economics & Finance, 2022, vol. 79, issue C, 38-55

Abstract: How do households’ Fintech borrowings respond to a country’s globalization initiative? It is intriguing to study whether Fintech market participants would form their expectations in the wake of a national strategy and thus affect their contemporaneous Fintech borrowings. In this paper, we investigate this question through China’s One Belt One Road initiative (OBOR) using transaction-level Peer-to-Peer (P2P) loan data. The difference-in-differences estimates, consistent with our theoretical framework, show that borrowers from China’s OBOR node-cities, especially the financially constrained ones, increase their Fintech loans instantaneously after the policy announcement. Such effects are more pronounced for borrowers from the infrastructure-related industries, the state-owned enterprises, and the silk-belt (land-based) node-cities. Our ex-post analysis indicates that the default rate of the borrowers from the OBOR node-cities is significantly lower. Finally, we find borrowers residing in the cities close to the node-cities also increase their Fintech leverages, showing a perceived positive externality of the policy initiative.

Keywords: Peer-to-Peer crowdfunding; The Belt Road Initiative (search for similar items in EconPapers)
JEL-codes: D14 F65 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:79:y:2022:i:c:p:38-55

DOI: 10.1016/j.iref.2021.12.018

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