Fintech vs. Bank: The Impact of Lending Technology on Credit Market Competition

Does the recent proliferation of technology in lending process have an impact on business loan market competition? Using a theoretical model that assumes heterogeneity in lenders’ screening ability and borrowers’ investment horizon, we show that FinTech (Traditional) lenders primarily supply unsecured (asset-backed) loans to borrowers with short-term (long-term) projects.

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