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Privacy regulation and fintech lending

Author

Listed:
  • Doerr, Sebastian
  • Gambacorta, Leonardo
  • Guiso, Luigi
  • Sanchez del Villar, Marina

Abstract

Individuals have concerns about sharing data, but without access to personal information data-intensive fintechs cannot prosper, nor consumers benefit from their services. Well-designed privacy protection regulation needs to address this conflict. This p aper studies h ow the California Consumer Privacy Act (CCPA), a 2020 privacy law that grants users control over data and mitigates concerns over sharing them, affects bank and fintech lending in the mortgage market. Using a difference-in-differences strategy comparing counties along the California border, we establish that the CCPA increases loan applications to fintechs by significantly more than those to banks, raising fintechs’ market share by 19%. Consistent with an improved screening process due to applicants’ greater willingness to share data with fintechs, fintechs engage in more individualized pricing, deny a greater share of applications, and increase their use of non-traditional data. In turn, fintechs can offer significantly lower loan rates compared with banks after the introduction of the CCPA.

Suggested Citation

  • Doerr, Sebastian & Gambacorta, Leonardo & Guiso, Luigi & Sanchez del Villar, Marina, 2023. "Privacy regulation and fintech lending," CEPR Discussion Papers 18216, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18216
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    Cited by:

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    2. Donato Masciandaro, 2023. "Politicians, Trust and Financial Literacy: When Do Politicians Care?," BAFFI CAREFIN Working Papers 23206, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    3. Paolo Siciliani & Peter Eccles, 2024. "Information disclosure and information acquisition in credit markets," Bank of England working papers 1067, Bank of England.
    4. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2025. "Bank competition and household privacy in a digital payment monopoly," Journal of Financial Economics, Elsevier, vol. 166(C).
    5. Donato Masciandaro, 2023. "Politicians, Trust, Financial Literacy and Financial Education: When Do Politicians Care?," BAFFI CAREFIN Working Papers 23208, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    6. Chen, S. & Doerr, S. & Frost, J. & Gambacorta, L. & Shin, H.S., 2023. "The fintech gender gap," Journal of Financial Intermediation, Elsevier, vol. 54(C).
    7. Marinela BÃRBULESCU & Alina HAGIU, 2022. "The Connotations Of The Crisis On The Cryptoassets Market," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 21(3), pages 123-136.
    8. Eccles, Peter & Siciliani, Paolo, 2026. "Information disclosure and information acquisition in credit markets," International Journal of Industrial Organization, Elsevier, vol. 104(C).
    9. Olivier Armantier & Sebastian Doerr & Jon Frost & Andreas Fuster & Kelly Shue, 2024. "Nothing to hide? Gender and age differences in willingness to share data," Swiss Finance Institute Research Paper Series 24-99, Swiss Finance Institute.
    10. Aldasoro, Iñaki & Armantier, Olivier & Doerr, Sebastian & Gambacorta, Leonardo & Oliviero, Tommaso, 2024. "The gen AI gender gap," Economics Letters, Elsevier, vol. 241(C).
    11. Doerr, Sebastian & Frost, Jon & Gambacorta, Leonardo & Shreeti, Vatsala, 2023. "Big techs in finance," CEPR Discussion Papers 18665, Centre for Economic Policy Research.
    12. Mert Demirer & Diego Jimenez-Hernandez & Dean Li & Sida Peng, 2024. "Data, Privacy Laws and Firm Production: Evidence from the GDPR," Working Paper Series WP 2024-02, Federal Reserve Bank of Chicago.

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    Keywords

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    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
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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