Do FinTech Mortgage Lenders Fill the Credit Gap? Evidence from Natural Disasters

77 Pages Posted: 7 Jul 2020 Last revised: 31 Dec 2021

See all articles by Linda Allen

Linda Allen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Yu Shan

Syracuse University - Whitman School of Management; Concordia University - John Molson School of Business

Yao Shen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Date Written: June 12, 2020

Abstract

After exogenous demand shocks caused by natural disasters, FinTech lenders are more responsive to increased demand for reconstruction mortgages than traditional banks and non-FinTech shadow banks. Both FinTech and traditional banks increase credit supply, but FinTech supply is more elastic without increases in risk-adjusted interest rates or delinquency rates. Comparing lending supply channels, banks respond to regulatory incentives to lend to damaged areas, whereas FinTech lenders supply more credit when traditional banks rely more on balance sheet financing and physical branch networks. Compared to traditional banks, FinTech lenders increase supply elasticity more aggressively in response to local competitive pressure.

Keywords: FinTech, Mortgage, Lending, Shadow Banks, Natural Disasters, Household Finance

JEL Classification: G20, G21, G24, G28

Suggested Citation

Allen, Linda and Shan, Yu and Shen, Yao, Do FinTech Mortgage Lenders Fill the Credit Gap? Evidence from Natural Disasters (June 12, 2020). Available at SSRN: https://ssrn.com/abstract=3625325 or http://dx.doi.org/10.2139/ssrn.3625325

Linda Allen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

17 Lexington Avenue
New York, NY 10010
United States
646-312-3463 (Phone)
646-312-3451 (Fax)

HOME PAGE: http://stern.nyu.edu/~lallen

Yu Shan (Contact Author)

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

Concordia University - John Molson School of Business ( email )

1450 Guy Street, MB 12.217
Montreal, Quebec H3H 0A1
Canada
(514) 848-2424 (Phone)

Yao Shen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

55 Lexington Ave
New York, NY 10010
United States

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