Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program

Isil Erel and Jack Liebersohn
Additional contact information
Isil Erel: Ohio State U and European Corporate Governance Institute
Jack Liebersohn: U of California, Irvine

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: New technology promises to expand the supply of financial services to small businesses poorly served by the banking system. Does it succeed? We study the response of FinTech to financial services demand created by the introduction of the Paycheck Protection Program (PPP). We find that FinTech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and a larger minority share of the population, as well as in industries with little ex ante small-business lending. FinTech's role in PPP provision is also greater in counties where the economic effects of the COVID-19 pandemic were more severe. We estimate that more PPP provision by traditional banks causes sta- tistically significant but economically small substitution away from FinTechs, implying that FinTech mostly expands the overall supply of financial services, rather than redistributing it.

JEL-codes: E6 G21 G23 G28 G38 H25 H32 I38 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-ban, nep-mac and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3 ... ctid=3650510&mirid=1

Related works:
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:ecl:ohidic:2020-16

Access Statistics for this paper

More papers in Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().