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Small business owners’ Fintech credit in crises: Theory and evidence from farmers under the COVID-19

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  • Liu, Yun
  • Zhang, Yun
  • Zhang, Yifei
  • Xiao, He

Abstract

This paper examines the COVID-19 impact on Chinese farmers’ peer-to-peer (P2P) borrowings using transaction-level data. Our difference-in-differences estimation results suggest that farmers from the most pandemic-affected region, Hubei province, substantially reduced their P2P loans by 13% compared to other areas. The decline in P2P loans is mainly driven by the demand shrinkage, as we find a significantly lower equilibrium interest rate. Besides, we evaluate the lockdown policy, showing that provinces with larger logistics capacities exhibit more considerable credit declines. Overall, our study suggests that Fintech lending functions as an alternative financing channel during the pandemic, though the demand shrinkage dominates the supply.

Suggested Citation

  • Liu, Yun & Zhang, Yun & Zhang, Yifei & Xiao, He, 2022. "Small business owners’ Fintech credit in crises: Theory and evidence from farmers under the COVID-19," Pacific-Basin Finance Journal, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:pacfin:v:71:y:2022:i:c:s0927538x21001992
    DOI: 10.1016/j.pacfin.2021.101692
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    Cited by:

    1. Jacek Adamek & Ma³gorzata Solarz, 2023. "Adoption factors in digital lending services offered by FinTech lenders," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 169-212, March.

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    More about this item

    Keywords

    Small business; COVID-19 crisis; Fintech credit;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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