The Real Effects of FinTech Lending on SMEs: Evidence from Loan Applications

39 Pages Posted: 4 Mar 2021 Last revised: 26 Oct 2021

See all articles by Afonso Eca

Afonso Eca

NOVA School of Business and Economics

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Melissa Porras Prado

Nova School of Business and Economics; Centre for Economic Policy Research (CEPR)

Antonino Emanuele Rizzo

Nova School of Business and Economics

Date Written: March 3, 2021

Abstract

We show that FinTech lending affects credit markets and real economic activity using a unique data set of a Peer-to-Business platform for which we have the universe of loan applications and loans granted. We find that FinTech serves the same segment of high quality and creditworthy small businesses as banks. Firms use FinTech loans to reduce bank dependence, especially from less liquid banks. We find that firms that access FinTech lending increase assets, employment, and sales relative to firms that get their loan application rejected. In addition, we find that firms increase leverage as they substitute long-term bank debt with long-term FinTech debt and short-term bank debt. Our findings suggest that FinTech lending reduces financing constraints and spurs investment and firm growth.

Keywords: FinTech, SMEs, Peer-to-Business lending, Small business lending

JEL Classification: G21, G23, O33

Suggested Citation

Eca, Afonso and Ferreira, Miguel Almeida and Porras Prado, Melissa and Rizzo, Antonino Emanuele, The Real Effects of FinTech Lending on SMEs: Evidence from Loan Applications (March 3, 2021). Available at SSRN: https://ssrn.com/abstract=3796896 or http://dx.doi.org/10.2139/ssrn.3796896

Afonso Eca

NOVA School of Business and Economics ( email )

Rua da Holanda, no. 1
Carcavelos, 2775-405
Portugal

Miguel Almeida Ferreira

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Melissa Porras Prado (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda 1
Carcavelos, 2775-405
Portugal

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Antonino Emanuele Rizzo

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

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