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Online financing without FinTech: Evidence from online informal loans

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  • Correia, Filipe
  • Martins, António
  • Waikel, Anthony

Abstract

We present the first comprehensive dataset on an online informal micro-lending community. These informal loans are small, short duration and high-cost. Using our unique micro data, and the Covid-19 pandemic as a laboratory, we uncover different types of information contained on loan terms and on the narratives of market participants. First, loan terms reflect the aggregate economic context of borrowers and lenders. Second, narratives among market participants contain additional and timely information about aggregate and individual borrower circumstances. Third, lenders imperfectly screen on both loan terms and narrative information. These findings highlight the role of data in FinTech. Transparency on micro-loans can improve the efficiency of the credit market, democratizing access to finance for borrowers, while protecting lenders.

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  • Correia, Filipe & Martins, António & Waikel, Anthony, 2022. "Online financing without FinTech: Evidence from online informal loans," Journal of Economics and Business, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:jebusi:v:121:y:2022:i:c:s0148619522000364
    DOI: 10.1016/j.jeconbus.2022.106080
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    Cited by:

    1. Babaei, Golnoosh & Giudici, Paolo & Raffinetti, Emanuela, 2023. "Explainable FinTech lending," Journal of Economics and Business, Elsevier, vol. 125.
    2. Randall E. Duran & Peter Tierney, 2023. "Fintech Data Infrastructure for ESG Disclosure Compliance," JRFM, MDPI, vol. 16(8), pages 1-19, August.

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    More about this item

    Keywords

    FinTech; Informal credit; Online lending; Pandemic;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G50 - Financial Economics - - Household Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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