IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/16258.html
   My bibliography  Save this paper

Information Technology and Lender Competition

Author

Listed:
  • Vives, Xavier
  • Ye, Zhiqiang

Abstract

We study how information technology (IT) affects competition and stability of lenders, investment, and welfare in a spatial model. While an IT improvement spurs entrepreneurs’ investment, other effects depend on whether the IT weakens the influence of lender–borrower distance on monitoring costs. If so, lending competition intensifies, which can reduce the profitability and stability of lenders and social welfare. Otherwise, competition intensity does not vary, bringing positive effects for lenders and welfare. IT investments of a bank and a fintech tend to be strategic complements. Lenders will invest excessively in IT, eliminating differentiation, if it is cheap enough. If not, the different types of IT investment co-move in response to shocks. Our results are consistent with received empirical work on lending to SMEs.

Suggested Citation

  • Vives, Xavier & Ye, Zhiqiang, 2021. "Information Technology and Lender Competition," CEPR Discussion Papers 16258, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16258
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP16258
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

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

    More about this item

    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
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    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:cpr:ceprdp:16258. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    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.