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Globalization blueprint and households’ fintech debt: Evidence from China’s One Belt One Road initiative

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Listed:
  • Zhang, Yun
  • Liu, Yun
  • Zhang, Yifei
  • Chen, Xin

Abstract

How do households’ Fintech borrowings respond to a country’s globalization initiative? It is intriguing to study whether Fintech market participants would form their expectations in the wake of a national strategy and thus affect their contemporaneous Fintech borrowings. In this paper, we investigate this question through China’s One Belt One Road initiative (OBOR) using transaction-level Peer-to-Peer (P2P) loan data. The difference-in-differences estimates, consistent with our theoretical framework, show that borrowers from China’s OBOR node-cities, especially the financially constrained ones, increase their Fintech loans instantaneously after the policy announcement. Such effects are more pronounced for borrowers from the infrastructure-related industries, the state-owned enterprises, and the silk-belt (land-based) node-cities. Our ex-post analysis indicates that the default rate of the borrowers from the OBOR node-cities is significantly lower. Finally, we find borrowers residing in the cities close to the node-cities also increase their Fintech leverages, showing a perceived positive externality of the policy initiative.

Suggested Citation

  • Zhang, Yun & Liu, Yun & Zhang, Yifei & Chen, Xin, 2022. "Globalization blueprint and households’ fintech debt: Evidence from China’s One Belt One Road initiative," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 38-55.
    • Handle: RePEc:eee:reveco:v:79:y:2022:i:c:p:38-55
    DOI: 10.1016/j.iref.2021.12.018
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    More about this item

    Keywords

    Peer-to-Peer crowdfunding; The Belt Road Initiative;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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