FinTech Credit and Entrepreneurial Growth
63 Pages Posted: 9 Aug 2021 Last revised: 28 Nov 2022
Date Written: March 24, 2021
Abstract
Based on automated credit lines to about two million vendors trading on Alibaba’s online retail platform, and a discontinuity in the credit decision algorithm, we document that a vendor’s access to FinTech credit boosts its sales growth, transaction growth, and the level of customer satisfaction gauged by product, service, and consignment ratings. These effects are more pronounced for vendors with (1) sparse credit information; (2) less collateral; (3) higher distribution costs; and (4) weaker debt contract enforceability in local regions, all of which reveal a FinTech advantage over traditional credit technology.
Keywords: FinTech, Big-tech, credit constraints, micro credit, entrepreneurship, service quality, customer satisfaction
JEL Classification: G20, G21, O43
Suggested Citation: Suggested Citation