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FinTech Lending with LowTech Pricing / Mark J. Johnson, Itzhak Ben-David, Jason Lee, Vincent Yao.
- Format:
- Book
- Author/Creator:
- Johnson, Mark J.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w31154.
- NBER working paper series no. w31154
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2023.
- Summary:
- FinTech lending--known for using big data and advanced technologies--promised to break away from the traditional credit scoring and pricing models. Using a comprehensive dataset of FinTech personal loans, our study shows that loan rates continue to rely heavily on conventional credit scores, including 45% higher rates for nonprime borrowers. Other known default predictors are often neglected. Within each segment (prime/nonprime) loan rates are not very responsive to default risk, resulting in realized loan-level returns decreasing with risk. The pricing distortions result in substantial transfers from nonprime to prime borrowers and from low- to high-risk borrowers within segment.
- Notes:
- Print version record
- April 2023.
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