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Fintech vs bank credit: How do they react to monetary policy?

Author

Listed:
  • Cornelli, Giulio
  • De Fiore, Fiorella
  • Gambacorta, Leonardo
  • Manea, Cristina

Abstract

Fintech credit, which includes peer-to-peer and marketplace lending as well as lending facilitated by major technology firms, is witnessing rapid growth worldwide. However, its responsiveness to monetary policy shifts remains largely unexplored. This study employs a novel credit dataset spanning 19 countries from 2005 to 2020 and conducts a PVAR analysis to shed some light on the different reaction of fintech and bank credit to changes in policy rates. The main result is that fintech credit shows a lower (even non-significant) reactivity to monetary policy shocks in comparison to traditional bank credit. Given the still marginal – although fast growing – macroeconomic significance of fintech credit, its contribution in explaining the variability of real GDP is less than 2%, against around one quarter for bank credit.

Suggested Citation

  • Cornelli, Giulio & De Fiore, Fiorella & Gambacorta, Leonardo & Manea, Cristina, 2024. "Fintech vs bank credit: How do they react to monetary policy?," Economics Letters, Elsevier, vol. 234(C).
    • Handle: RePEc:eee:ecolet:v:234:y:2024:i:c:s0165176523005013
    DOI: 10.1016/j.econlet.2023.111475
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    More about this item

    Keywords

    Fintech credit; Monetary policy; PVAR; Collateral channel;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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