FinTech Credit: A Critical Review of Empirical Research Literature

26 Pages Posted: 28 May 2020

Date Written: March 18, 2020

Abstract

FinTech credit has attracted significant attention from academics and policymakers in recent years. Given its growing importance, in this paper we provide an overview of the empirical research on FinTech credit to households and non-financial corporations (NFCs). We focus on three broad topics: i) the factors supporting the development of innovative business models for credit intermediation, such as marketplace lending; ii) the benefits of new credit risk assessment data and methods; iii) the implications of these innovations for access to credit. Three main messages emerge from the literature. First, the growth of lenders with innovative business models is mainly driven by the degree of local economic development and of competition in the banking sector. Second, new data and methods can improve traditional credit risk models because they are particularly helpful in screening opaque borrowers, such as those with scant credit history. Third, FinTech borrowers generally lack (or have limited) access to finance and tend to be riskier than traditional bank borrowers.

Keywords: artificial intelligence, credit, digital technologies, FinTech, marketplace lending

JEL Classification: G21, G22, G23, G24

Suggested Citation

Branzoli, Nicola and Supino, Ilaria, FinTech Credit: A Critical Review of Empirical Research Literature (March 18, 2020). Bank of Italy Occasional Paper No. 549, Available at SSRN: https://ssrn.com/abstract=3612726 or http://dx.doi.org/10.2139/ssrn.3612726

Nicola Branzoli (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Ilaria Supino

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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