FinTech Lending and Cashless Payments
74 Pages Posted: 12 Mar 2021 Last revised: 11 Mar 2022
Date Written: March 9, 2022
Abstract
We uncover an informational synergy between FinTech lending and cashless payments. Theoretically, FinTech lenders screen borrowers more efficiently when borrowers use cashless payments that produce transferable and verifiable information. In turn, a strategic consideration to stand out from non-adopting borrowers pushes borrowers to adopt cashless payments. Empirically, a larger use of cashless payments predicts a higher likelihood of loan approval, a lower interest rate, and a higher loan amount, especially for firms of higher credit quality. This synergy provides an economic rationale for open banking, and more broadly for data sharing and a lending model without traditional banking relationships.
Keywords: FinTech, lending, payments, verifiability, data sharing, open banking.
JEL Classification: G21, G23, D82
Suggested Citation: Suggested Citation