Fintech Lending and Debt Spiral
Tracks
Jade 1
Tuesday, July 2, 2024 |
3:05 PM - 3:30 PM |
Presenter
Dr Jianlei Han
Senior Lecturer
Macquarie Business School
Fintech Lending and Debt Spiral
Abstract
We examine whether and how consumers can be trapped in debt spirals in fintech lending markets. With alternative data sources, fintech lenders may target and provide easy-access credit products to new customers. We find that after obtaining a focal fintech lenders loan approval, borrowers receive more promotional messages from other fintech lending platforms, causing greater tendencies of subsequent new borrowing, personal expenditure, loan delinquency, and experiencing adverse social outcomes. This effect is stronger for borrowers with low financial literacy, limited credit access, and weak social insurance. Taken together, we document the economic and social consequences of fintech consumers overborrowing behavior.
Biography
Discussant
Christiana Osei Bonsu
Lecturer
Australian Institute of Business