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Did FinTech Lenders Facilitate PPP Fraud?

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  • JOHN M. GRIFFIN
  • SAMUEL KRUGER
  • PRATEEK MAHAJAN

Abstract

In the $793 billion Paycheck Protection Program, we examine metrics related to potential misreporting including nonregistered businesses, multiple businesses at residential addresses, abnormally high implied compensation per employee, and large inconsistencies with jobs reported in another government program. These measures consistently concentrate in certain FinTech lenders and are cross‐verified by seven additional measures. FinTech market share increased significantly over time, and suspicious lending by FinTechs in 2021 is four times the level at the start of the program. Suspicious loans are being overwhelmingly forgiven at rates similar to other loans.

Suggested Citation

  • John M. Griffin & Samuel Kruger & Prateek Mahajan, 2023. "Did FinTech Lenders Facilitate PPP Fraud?," Journal of Finance, American Finance Association, vol. 78(3), pages 1777-1827, June.
    • Handle: RePEc:bla:jfinan:v:78:y:2023:i:3:p:1777-1827
    DOI: 10.1111/jofi.13209
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    References listed on IDEAS

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    Cited by:

    1. Donato Masciandaro, 2023. "Politicians, Trust and Financial Literacy: When Do Politicians Care?," BAFFI CAREFIN Working Papers 23206, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    2. Mark K. Cassell & Michael Schwan & Marc Schneiberg, 2023. "Bank Types, Inclusivity, and Paycheck Protection Program Lending During COVID-19," Economic Development Quarterly, , vol. 37(3), pages 277-294, August.
    3. Donato Masciandaro, 2023. "Politicians, Trust, Financial Literacy and Financial Education: When Do Politicians Care?," BAFFI CAREFIN Working Papers 23208, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    4. Carolina Guerini & Donato Masciandaro, 2023. "Financial Education between Market and State: Private Commitment, Conflicts of Interest and Public Certification," BAFFI CAREFIN Working Papers 23213, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. Jesper Akesson & John Gathergood & Edika Quispe-Torreblanca, 2023. "Preventing Payments Fraud in the FinTech Era: New Evidence from a Behavioural Experiment," Discussion Papers 2023-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Daniel G. Neely & Gregory D. Saxton & Paul A. Wong, 2023. "Nonprofit Organizations’ Financial Obligations and the Paycheck Protection Program," Management Science, INFORMS, vol. 69(7), pages 4353-4361, July.

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