Why Did Small Business FinTech Lending Dry Up During the COVID-19 Crisis? / Itzhak Ben-David, Mark J. Johnson, René M. Stulz.

Format:

Book

Author/Creator:

Ben-David, Itzhak.

Contributor:

National Bureau of Economic Research.

Johnson, Mark J.

Stulz, René M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29205.

NBER working paper series no. w29205

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

FinTech small business lenders fund loans mostly through credit facilities and securitizations. This business model could make them financially constrained when a shock reduces the value of existing loans. We find evidence supporting this prediction using detailed applicant-level and lender-level data from a platform that intermediates loans between dozens of FinTech lenders and small businesses. Despite the increased demand for credit at the onset of the COVID crisis, the credit supply quickly dwindled, regardless of borrowers' credit quality. Overall, our analysis demonstrates the fragility of the FinTech lending model in the face of a crisis.

Notes:

Print version record

September 2021.