Fintech and big tech credit: drivers of the growth of digital lending

Fintech and big tech companies are making rapid inroads into credit markets. We hand construct a global database of fintech and big tech lending volumes for 79 countries over 2013-2018. Using a panel regression analysis, we find these new forms of digital lending are larger in countries with higher GDP per capita (albeit at a declining rate), where banking sector mark-ups are higher, and where banking regulation is less stringent. We also find that these alternative forms of credit are more developed where the ease of doing business is greater, investor protection disclosure and the efficiency of the judicial system are more advanced, and where bond and equity markets are more developed. Overall, fintech and big tech credit seem to complement other forms of credit, rather than substitute for them

Buy now, pay later : a cross-country analysis

Buy now, pay later (BNPL) schemes let consumers spread their spending over a number of interest-free instalments, which are typically unreported to credit bureaus. BNPL is growing strongly, especially in countries with strong e-commerce, higher inflation, inefficient banking systems and less stringent regulations. Used to a greater extent by young adults, who are typically heavily indebted and have low credit scores, BNPL schemes suffer higher delinquency rates than traditional consumer credit

Regulatory Sandboxes and Fintech Funding: Evidence from the UK

Over fifty countries have introduced regulatory sandboxes to foster financial innovation. This article conducts the first evaluation of their ability to improve fintechs’ access to capital and attendant real effects. Exploiting the staggered introduction of the UK sandbox, we establish that firms entering the sandbox see an increase of 15% in capital raised post-entry. Their probability of raising capital increases by 50%. Sandbox entry also has a significant positive effect on survival rates and patenting. Investigating the mechanism, we present evidence consistent with lower asymmetric information and regulatory costs