FinTech Lending and Cashless Payments

74 Pages Posted: 12 Mar 2021 Last revised: 11 Mar 2022

See all articles by Pulak Ghosh

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore

Boris Vallee

Harvard Business School - Finance Unit

Yao Zeng

University of Pennsylvania - The Wharton School

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

Ghosh, Pulak and Vallee, Boris and Zeng, Yao, FinTech Lending and Cashless Payments (March 9, 2022). Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=3766250 or http://dx.doi.org/10.2139/ssrn.3766250

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Boris Vallee (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States

Yao Zeng

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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