Digital disruption in financing: Are fintech and bigtech credit reshaping corporate access to capital?

This study examines the role of fintech and bigtech credit, collectively referred to as alternative digital credit, in alleviating corporate financing constraints across 70 countries from 2013 to 2019. The findings indicate that alternative digital credit alleviates financing constraints by reducing investment-to-cash flow sensitivity, particularly in developing countries. This effect is more pronounced in financially developed markets with strong institutional frameworks but less competitive banking sectors. The advantages of alternative digital credit are particularly notable for small, young, and manufacturing firms. Firms engaged in international trade and those owned by foreign investors face fewer constraints due to their inherent advantages. Consistency checks using alternative measures of financing constraints reaffirm these findings. The analysis of transmission channels further highlights that the entry of fintech and bigtech firms weakens banks’ market power, encouraging greater competition in the banking sector and ultimately lowering firms’ financing constraints. These insights highlight the transformative potential of alternative digital credit in promoting financial inclusion and propose targeted policies to enhance its adoption globally.