Privacy regulation and fintech lending

Sebastian Doerr, Leonardo Gambacorta, Luigi Guiso and Marina Sanchez del Villar

No 18216, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Individuals have concerns about sharing data, but without access to personal information data-intensive fintechs cannot prosper, nor consumers benefit from their services. Well-designed privacy protection regulation needs to address this conflict. This p aper studies h ow the California Consumer Privacy Act (CCPA), a 2020 privacy law that grants users control over data and mitigates concerns over sharing them, affects bank and fintech lending in the mortgage market. Using a difference-in-differences strategy comparing counties along the California border, we establish that the CCPA increases loan applications to fintechs by significantly more than those to banks, raising fintechs’ market share by 19%. Consistent with an improved screening process due to applicants’ greater willingness to share data with fintechs, fintechs engage in more individualized pricing, deny a greater share of applications, and increase their use of non-traditional data. In turn, fintechs can offer significantly lower loan rates compared with banks after the introduction of the CCPA.

Keywords: Fintech; Data sharing; Privacy regulation; Data privacy; CCPA (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Date: 2023-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18216 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Privacy regulation and fintech lending (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18216

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18216

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().