DOES FINTECH SUBSTITUTE FOR BANKS? EVIDENCE FROM THE PAYCHECK PROTECTION PROGRAM

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• Isil Erel, David A. Rismiller Chair in Finance, Academic Director of the Risk Institute, Fisher College of Business of the Ohio State University.
• Tuesday 17 November 2020, 13:00-14:00
• Webinar (via Zoom online).

If you have a question about this talk, please contact Emily Brown.

To join the seminar, register and join the Zoom meeting and enter the meeting ID. Meeting ID: 917 5002 8841 Password: 386866. https://jbs-cam.zoom.us/j/91750028841?pwd=cG91T2Jhbis1K0Rrc09ta24vUm1BUT09

New technology promises to expand the supply of financial services to borrowers poorly served by the banking system. Does it succeed? We study the response of FinTech to financial services demand created by the introduction of the Paycheck Protection Program (PPP). We find that FinTech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and a larger minority share of the population, as well as in industries with little ex ante small business lending. FinTech’s role in PPP provision is also greater in counties where the economic effects of the COVID -19 pandemic were more severe. Using the predicted responsiveness of traditional banks to the program in areas where they have branches as an instrument, we also show that only a small fraction of borrowers substituted to FinTech lenders when local traditional banks were not available.

This talk is part of the Finance Seminars, CJBS series.

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• Finance Seminars, CJBS
• Webinar (via Zoom online)

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