The Rise of Finance Companies and FinTech Lenders in Small Business Lending
Manasa Gopal, Philipp Schnabl, The Rise of Finance Companies and FinTech Lenders in Small Business Lending, The Review of Financial Studies, 2022;, hhac034, https://doi.org/10.1093/rfs/hhac034
86 Pages Posted: 8 Jun 2020 Last revised: 6 Jul 2022
Date Written: May 13, 2020
We document that finance companies and FinTech lenders increased lending to small businesses after the 2008 financial crisis. We show that most of the increase substituted for a reduction in bank lending. In counties in which banks had a larger market share before the crisis, finance companies and FinTech lenders increased their lending more. We find no effect of reduced bank lending on employment, wages, and new business creation by 2016. Our results suggest that finance companies and FinTech lenders are major suppliers of credit to small businesses and played an important role in the recovery from the 2008 financial crisis.
Keywords: banks, finance companies, small business lending, financial crises
JEL Classification: G21, G23, G01
Suggested Citation: Suggested Citation