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

NYU Stern School of Business

86 Pages Posted: 8 Jun 2020 Last revised: 6 Jul 2022

See all articles by Manasa Gopal

Manasa Gopal

Georgia Institute of Technology - Scheller College of Business

Philipp Schnabl

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: May 13, 2020

Abstract

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

Gopal, Manasa and Schnabl, Philipp, The Rise of Finance Companies and FinTech Lenders in Small Business Lending (May 13, 2020). 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, NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3600068 or http://dx.doi.org/10.2139/ssrn.3600068

Manasa Gopal

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

HOME PAGE: http://https://manasagopal.com/

Philipp Schnabl (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

HOME PAGE: http://pages.stern.nyu.edu/~sternfin/pschnabl/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,417
Abstract Views
7,667
Rank
10,876
PlumX Metrics