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Determinants of Fintech and Bigtech lending: the role of financial inclusion and financial development

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  • Ozili, Peterson K

Abstract

Credit markets around the world are undergoing digital transformation which has led to the rise in Fintech and Bigtech lending. Fintech and Bigtech lending is the provision of credit by Fintech and Bigtech providers who have more capital, cutting-edge IT systems, worldwide recognition, greater online presence and are able to handle more big data on computers and mobile phones than traditional banks. Fintech and Bigtech lending is growing in importance, but the determinants of Fintech and Bigtech lending have received little attention in the literature. This study investigates the determinants of Fintech and Bigtech lending. The study focused on the effect of financial inclusion and financial development on Fintech and Bigtech lending. Using data for 18 countries from 2013 to 2019 and employing the difference-GMM and 2SLS regression methods, the findings reveal that financial inclusion and financial development are significant determinants of Fintech and Bigtech lending. Financial development is a positive determinant of Fintech and Bigtech lending while financial inclusion has a significant effect on Fintech and Bigtech lending. Also, Fintech and Bigtech lending lead to greater banking sector stability and also poses the risk of rising nonperforming loans. There is also a significant positive correlation between financial development and Fintech and Bigtech lending. These findings add to the emerging literature on the role of Fintech and Bigtech in financial intermediation. This research is significant because it provides insights into the role of financial inclusion and financial development in digital transformation of credit markets.

Suggested Citation

  • Ozili, Peterson K, 2023. "Determinants of Fintech and Bigtech lending: the role of financial inclusion and financial development," MPRA Paper 117465, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:117465
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    References listed on IDEAS

    as
    1. Blake, David, 1996. "Financial Intermediation and Financial Innovation in a Characteristics Framework," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(1), pages 16-31, February.
    2. Karen Chapple & Jae Sik Jeon, 2021. "Big Tech on the Block: Examining the Impact of Tech Campuses on Local Housing Markets in the San Francisco Bay Area," Economic Development Quarterly, , vol. 35(4), pages 351-369, November.
    3. Tough Chinoda & Tafirei Mashamba & Andrew Vivian, 2021. "Fintech, financial inclusion and income inequality nexus in Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1986926-198, January.
    4. ., 2019. "The future of interest-free financing," Chapters, in: Religion and Finance, chapter 9, pages 193-215, Edward Elgar Publishing.
    5. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    Cited by:

    1. Li, Hongmei & Xu, Ruizhe, 2023. "Impact of fiscal policies and natural resources on ecological sustainability of BRICS region: Moderating role of green innovation and ecological governance," Resources Policy, Elsevier, vol. 85(PB).
    2. Krzysztof Waliszewski & Ewa Cichowicz & £ukasz Gêbski & Filip Kliber & Jakub Kubiczek & Pawe³ Niedzió³ka & Ma³gorzata Solarz & Anna Warchlewska, 2023. "The role of the Lendtech sector in the consumer credit market in the context of household financial exclusion," Oeconomia Copernicana, Institute of Economic Research, vol. 14(2), pages 609-643, June.
    3. Peterson K. Ozili, 2023. "Impact of Monetary Policy on Financial Inclusion in Emerging Markets," JRFM, MDPI, vol. 16(7), pages 1-10, June.

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    More about this item

    Keywords

    financial inclusion; financial development; Fintech; Bigtech; lending; ATM; bank branch; access to finance;
    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

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