Can FinTech Reduce Disparities in Access to Finance? Evidence from the Paycheck Protection Program

Fisher College of Business Working Paper No. 2020-03-016

Charles A. Dice Working Paper 2020-16

81 Pages Posted: 14 Jul 2020 Last revised: 6 Oct 2021

See all articles by Isil Erel

Isil Erel

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Jack Liebersohn

University of California, Irvine

Multiple version iconThere are 2 versions of this paper

Date Written: September 30, 2021

Abstract

New technology promises to expand the supply of financial services to small businesses poorly served by banks. Does it succeed? We study the response of FinTech to financial services demand created by the introduction of the Paycheck Protection Program. Fin-Tech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and more minority households, and in industries with fewer banking relationships. It is also greater in counties where the economic effects of the COVID-19 pandemic were more severe. Substitution between FinTech and banks is economically small, implying that FinTech mostly expands, rather than redistributes, the supply of financial services.

Keywords: Financial Technology, Coronavirus, Recession, Nonbank, Online Bank, Loan, Credit, Subsidy

JEL Classification: E6, G21, G23, G28, G38, H25, H32, I38

Suggested Citation

Erel, Isil and Liebersohn, Jack, Can FinTech Reduce Disparities in Access to Finance? Evidence from the Paycheck Protection Program (September 30, 2021). Fisher College of Business Working Paper No. 2020-03-016, Charles A. Dice Working Paper 2020-16, Available at SSRN: https://ssrn.com/abstract=3650510 or http://dx.doi.org/10.2139/ssrn.3650510

Isil Erel (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

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National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Jack Liebersohn

University of California, Irvine ( email )

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