Do Fintech Lenders Penetrate Areas that are Underserved by Traditional Banks?

Abstract

Supersedes Working Paper 17-17 Fintech has been playing an increasing role in shaping financial and banking landscapes. In this paper, we use account-level data from LendingClub and Y-14M data reported by U.S. banks with assets over $50 billion to examine whether the fintech lending platform could expand credit access to consumers. We find that LendingClub?s consumer lending activities have penetrated areas that may be underserved by traditional banks, such as in highly concentrated markets and in areas that have fewer bank branches per capita. We also find that the portion of LendingClub loans increases in areas where the local economy is not performing well.

Keywords: fintech, lending club, marketplace lending, banking competition, shadow banking, peer-to-peer lending

JEL Classification: G18, G21, G28, L21