IDEAS home Printed from https://ideas.repec.org/a/eee/jebusi/v121y2022ics014861952200025x.html
   My bibliography  Save this article

Digitalization and data, institutional quality and culture as drivers of technology-based credit providers

Author

Listed:
  • Kowalewski, Oskar
  • Pisany, Paweł
  • Ślązak, Emil

Abstract

We investigate the development of technology-driven alternative credit markets using data from 94 countries for the period 2013–2019. We find that digitalization, institutional quality, and culture play significant roles in the national development of fintech and big tech credit. Moreover, we present the differences between the two types of alternative technology-based lending and consumer bank loans in this area. We show that different sets of factors encourage the development of either fintech, big tech, bank consumer loans, or all of them. Furthermore, we find that various national cultural profiles can boost the development of fintech credit services as well as bank consumer loans, while non-monetary factors play a greater role in fintech credit development paths than in bank loans across multiple countries. We posit that the sociocultural features of different markets determine the conditions of competition between banks and technology-based alternative lending providers in the digital era, and that they are one of the key drivers of final market success in different countries.

Suggested Citation

  • Kowalewski, Oskar & Pisany, Paweł & Ślązak, Emil, 2022. "Digitalization and data, institutional quality and culture as drivers of technology-based credit providers," Journal of Economics and Business, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:jebusi:v:121:y:2022:i:c:s014861952200025x
    DOI: 10.1016/j.jeconbus.2022.106069
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S014861952200025X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeconbus.2022.106069?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kowalewski, Oskar & Pisany, Paweł, 2023. "The rise of fintech: A cross-country perspective," Technovation, Elsevier, vol. 122(C).
    2. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    3. Jon Frost & Leonardo Gambacorta & Yi Huang & Hyun Song Shin & Pablo Zbinden, 2019. "BigTech and the changing structure of financial intermediation," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 34(100), pages 761-799.
    4. Stijn Claessens & Jon Frost & Grant Turner & Feng Zhu, 2018. "Fintech credit markets around the world: size, drivers and policy issues," BIS Quarterly Review, Bank for International Settlements, September.
    5. Stefania Albanesi & Domonkos F. Vamossy, 2019. "Predicting Consumer Default: A Deep Learning Approach," NBER Working Papers 26165, National Bureau of Economic Research, Inc.
    6. Jagtiani, Julapa & Lemieux, Catharine, 2018. "Do fintech lenders penetrate areas that are underserved by traditional banks?," Journal of Economics and Business, Elsevier, vol. 100(C), pages 43-54.
    7. Franklin Allen & Xian Gu & Julapa Jagtiani, 2021. "A Survey of Fintech Research and Policy Discussion," Review of Corporate Finance, now publishers, vol. 1(3-4), pages 259-339, July.
    8. Calebe de Roure & Loriana Pelizzon & Anjan Thakor, 2022. "P2P Lenders versus Banks: Cream Skimming or Bottom Fishing? [Loan officer incentives, internal rating models and default rates]," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 11(2), pages 213-262.
    9. Lee, Suin & Pantzalis, Christos & Park, Jung Chul, 2019. "Does local culture trigger speculative investment behavior?," Journal of Business Research, Elsevier, vol. 103(C), pages 71-88.
    10. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
    11. Julapa Jagtiani & Catharine Lemieux, 2019. "The roles of alternative data and machine learning in fintech lending: Evidence from the LendingClub consumer platform," Financial Management, Financial Management Association International, vol. 48(4), pages 1009-1029, December.
    12. Huan Tang, 2019. "Peer-to-Peer Lenders Versus Banks: Substitutes or Complements?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1900-1938.
    13. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Trusting the Stock Market," Journal of Finance, American Finance Association, vol. 63(6), pages 2557-2600, December.
    14. Berger, Allen N. & Li, Xinming & Morris, Charles S. & Roman, Raluca A., 2021. "The Effects of Cultural Values on Bank Failures around the World," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(3), pages 945-993, May.
    15. Giulio Cornelli & Jon Frost & Leonardo Gambacorta & Raghavendra Rau & Robert Wardrop & Tania Ziegler, 2020. "Fintech and big tech credit: a new database," BIS Working Papers 887, Bank for International Settlements.
    16. Bömer, Max & Maxin, Hannes, 2018. "Why Fintechs Cooperate with Banks - Evidence from Germany," Hannover Economic Papers (HEP) dp-637, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    17. Ashraf, Badar Nadeem & Zheng, Changjun & Arshad, Sidra, 2016. "Effects of national culture on bank risk-taking behavior," Research in International Business and Finance, Elsevier, vol. 37(C), pages 309-326.
    18. Leonardo Gambacorta & Yiping Huang & Han Qiu & Jingyi Wang, 2019. "How do machine learning and non-traditional data affect credit scoring? New evidence from a Chinese fintech firm," BIS Working Papers 834, Bank for International Settlements.
    19. Christian Haddad & Lars Hornuf, 2019. "The emergence of the global fintech market: economic and technological determinants," Small Business Economics, Springer, vol. 53(1), pages 81-105, June.
    20. Gupta, Deepika R. & Veliyath, Rajaram & George, Rejie, 2018. "Influence of national culture on IPO activity," Journal of Business Research, Elsevier, vol. 90(C), pages 226-246.
    21. Beracha, Eli & Fedenia, Mark & Skiba, Hilla, 2014. "Culture's impact on institutional investors' trading frequency," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 34-47.
    22. Chourou, Lamia & Saadi, Samir & Zhu, Hui, 2018. "How does national culture influence IPO underpricing?," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 318-341.
    23. Nicola Branzoli & Ilaria Supino, 2020. "FinTech credit: a critical review of empirical research," Questioni di Economia e Finanza (Occasional Papers) 549, Bank of Italy, Economic Research and International Relations Area.
    24. Chang, Chih-Hsiang & Lin, Shih-Jia, 2015. "The effects of national culture and behavioral pitfalls on investors' decision-making: Herding behavior in international stock markets," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 380-392.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oskar Kowalewski & Pawel Pisany & Emil Slazak, 2021. "What determines cross-country differences in fintech and bigtech credit markets?," Working Papers 2021-ACF-02, IESEG School of Management.
    2. Kowalewski, Oskar & Pisany, Paweł, 2022. "Banks' consumer lending reaction to fintech and bigtech credit emergence in the context of soft versus hard credit information processing," International Review of Financial Analysis, Elsevier, vol. 81(C).
    3. Wang, Xiaoting & Hou, Siyuan & Kyaw, Khine & Xue, Xupeng & Liu, Xueqin, 2023. "Exploring the determinants of Fintech Credit: A comprehensive analysis," Economic Modelling, Elsevier, vol. 126(C).
    4. Jackowicz, Krzysztof & Kowalewski, Oskar & Kozłowski, Łukasz, 2022. "Foreign bank lending: The role of home country culture during prosperous and crisis periods," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    5. Nicola Branzoli & Ilaria Supino, 2020. "FinTech credit: a critical review of empirical research," Questioni di Economia e Finanza (Occasional Papers) 549, Bank of Italy, Economic Research and International Relations Area.
    6. Tobias Berg & Andreas Fuster & Manju Puri, 2022. "FinTech Lending," Annual Review of Financial Economics, Annual Reviews, vol. 14(1), pages 187-207, November.
    7. Eccles, Peter & Grout, Paul & Siciliani, Paolo & Zalewska, Anna, 2021. "The impact of machine learning and big data on credit markets," Bank of England working papers 930, Bank of England.
    8. Giulio Cornelli & Jon Frost & Leonardo Gambacorta & Raghavendra Rau & Robert Wardrop & Tania Ziegler, 2020. "Fintech and big tech credit: a new database," BIS Working Papers 887, Bank for International Settlements.
    9. Chen, Wen & Wu, Weili & Zhang, Tonghui, 2023. "Fintech development, firm digitalization, and bank loan pricing," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    10. Cornelli, Giulio & Frost, Jon & Gambacorta, Leonardo & Rau, P. Raghavendra & Wardrop, Robert & Ziegler, Tania, 2023. "Fintech and big tech credit: Drivers of the growth of digital lending," Journal of Banking & Finance, Elsevier, vol. 148(C).
    11. Peng, Hongfeng & Ji, Jiao & Sun, Hanwen & Xu, Haofeng, 2023. "Legal enforcement and fintech credit: International evidence," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 214-231.
    12. Štefan Lyócsa & Petra Vašaničová & Branka Hadji Misheva & Marko Dávid Vateha, 2022. "Default or profit scoring credit systems? Evidence from European and US peer-to-peer lending markets," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-21, December.
    13. Xie, Xueyan & Zhu, Xiaoyang, 2022. "FinTech and capital allocation efficiency: Another equity-efficiency dilemma?," Global Finance Journal, Elsevier, vol. 53(C).
    14. Giulio Cornelli & Jon Frost & Leonardo Gambacorta & Julapa Jagtiani, 2022. "The Impact of Fintech Lending on Credit Access for U.S. Small Businesses," Working Papers 22-14, Federal Reserve Bank of Philadelphia.
    15. Boot, Arnoud & Hoffmann, Peter & Laeven, Luc & Ratnovski, Lev, 2021. "Fintech: what’s old, what’s new?," Journal of Financial Stability, Elsevier, vol. 53(C).
    16. Lei Lu & Jianxing Wei & Weixing Wu & Yi Zhou, 2023. "Pricing strategies in BigTech lending: Evidence from China," Financial Management, Financial Management Association International, vol. 52(2), pages 333-374, June.
    17. Huang, Yiping & Li, Xiang & Qiu, Han & Yu, Changhua, 2023. "BigTech credit and monetary policy transmission: Micro-level evidence from China," BOFIT Discussion Papers 2/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    18. Allen, Franklin & Gu, Xian & Jagtiani, Julapa, 2022. "Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China," Journal of International Money and Finance, Elsevier, vol. 124(C).
    19. Kowalewski, Oskar & Pisany, Paweł, 2023. "The rise of fintech: A cross-country perspective," Technovation, Elsevier, vol. 122(C).
    20. Salvatore Cardillo & Raffaele Gallo & Francesco Guarino, 2021. "Main challenges and prospects for the European banking sector: a critical review of the ongoing debate," Questioni di Economia e Finanza (Occasional Papers) 634, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    Alternative credit; Fintech; Big tech; Innovation; Culture; Trust; Privacy;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jebusi:v:121:y:2022:i:c:s014861952200025x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-economics-and-business .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.