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

25 Pages Posted: 15 May 2018

See all articles by Julapa Jagtiani

Julapa Jagtiani

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Catharine Lemieux

Federal Reserve Bank of Chicago

Date Written: 2018-03-23

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, LendingClub, marketplace lending, banking competition, shadow banking, peer-to-peer lending

JEL Classification: G18, G21, G28, L21

Suggested Citation

Jagtiani, Julapa and Lemieux, Catharine, Do Fintech Lenders Penetrate Areas that are Underserved by Traditional Banks? (2018-03-23). FRB of Philadelphia Working Paper No. 18-13. Available at SSRN: https://ssrn.com/abstract=3178459 or http://dx.doi.org/10.21799/frbp.wp.2018.13

Julapa Jagtiani (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Catharine Lemieux

Federal Reserve Bank of Chicago

230 South LaSalle Street
Chicago, IL 60604
United States

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