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Fintech to the Rescue or Predators in Disguise?

In: Taming the Fringe

Author

Listed:
  • Craig McMahon

    (Villanova University)

Abstract

It is not clear whether those locked out of the small-loan market are better off without a loan. Affordable credit remains out of reach for many low-income households. Lending small sums is expensive, risky and the product invites negative publicity and criticism. Technology might offer new opportunities to disrupt the high-cost credit sector. Whether fintech offers a long-term and financially viable alternative to fringe providers is unknown. Some consumer advocates think these companies are yet another form of predatory lending profiting off of poor and vulnerable households. Two questions remain unanswered: What does financial inclusion actually mean for the poor and is there a way to responsibly overcome the inherent tension in pricing risk for a market segment that has experienced financial difficulties before seeking credit.

Suggested Citation

  • Craig McMahon, 2021. "Fintech to the Rescue or Predators in Disguise?," Palgrave Studies in the History of Finance, in: Taming the Fringe, chapter 0, pages 185-211, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-3-030-70615-9_6
    DOI: 10.1007/978-3-030-70615-9_6
    as

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