Do coordination failures constrain financial technology adoption? Exploiting the Mexican government’s rollout of 1 million debit cards to poor households from 2009 to 2012, I examine responses on both sides of the market and find important spillovers and distributional impacts. On the supply side, small retail firms adopted point-of-sale terminals to accept card payments. On the demand side, this led to a 21 percent increase in other consumers’ card adoption. The supply-side technology adoption response had positive effects on both richer consumers and small retail firms: richer consumers shifted 13 percent of their supermarket consumption to small retailers, whose sales and profits increased

We document the unique structure of the peer-to-peer lending market. Originally designed as decentralized, the market has become highly, but not fully, reintermediated. The platforms’ software now performs essentially all tasks related to loan evaluation, whereas most lenders are passive and automatically fund most applications on offer. Yet unlike banks, and in contrast to theories predicting full reintermediation, the platforms provide detailed loan information, and some active loan pickers coexist with passive investors. We argue that while intermediation attracts unsophisticated passive investors, transparency in the presence of active investors resolves the lending platform’s moral hazard problem inherent in intermediated markets.

Financial intermediation has distinct value from transforming financial claims to create liquidity and mitigate risks. However, research and policy competition analyses often neglect this value or minimally account for it. We review findings to better incorporate this value. We suggest shifting the mix of individual services analyzed to better represent the distinct value, focusing more on topics closely aligned with the distinct value concept beyond individual services, and accounting for the multimarket nature of financial intermediation. We recommend attention on future competition with digital FinTech, BigTech, and DeFi firms and policies to best preserve the distinct value of financial intermediation

Security design, which broadly speaking deals with the issue of designing optimal contractual mechanisms for overcoming various frictions between agents, is the subject of an extensive literature. This paper presents a review of recent work on security design and is organized around the applications of security design in various fields of finance starting with classic corporate finance applications such as capital structure and corporate governance, financial intermediation applications such as securitization and contingent capital, the interaction of market and security design, as well as emerging applications such as fintech, sustainable finance and healthcare finance. Future research is also discussed

When race is not directly observed, regulators and analysts commonly predict it using algorithms based on last name and address. In small business lending—where regulators assess fair lending law compliance using the Bayesian Improved Surname Geocoding (BISG) algorithm—we document large prediction errors among Black Americans. The errors bias measured racial disparities in loan approval rates downward by 43%, with greater bias for traditional vs. fintech lenders. Regulation using self-identified race would increase lending to Black borrowers, but also shift lending toward affluent areas because errors correlate with socioeconomics. Overall, using race proxies in policymaking and research presents challenges

We investigate the economic value of cash management. In the legal marijuana industry, where only half of businesses have access to cash management services from a financial institution, we examine dispensary profitability using administrative and survey data. Our results show that businesses with cash management charge higher retail prices (8.3%), pay lower wholesale prices (7.3%), and have higher sales volume (19%). Together, these advantages create a 40% increase in profitability. These results support our model in which reputational capital and administrative costs drive profitability regardless of whether national banks, credit unions, or fintech provide the cash management functions

How do banks offer and price mortgages when an online platform enables them to reach regions where they have no branches? With unique data on responses from differently located banks to each applying household and a shift-share instrument for market concentration, we find banks to make more and cheaper offers to more concentrated local markets. We rationalize this as investments in lucrative market shares given customer switching costs. Banks also improve their inter-regional portfolio diversification with more attractive offers to regions more complementary to their home locales. Finally, banks` choices become increasingly automated, reducing their operating costs.

Process automation reduces racial disparities in credit access by enabling smaller loans, broadening banks' geographic reach, and removing human biases from decision making. We document these findings in the context of the Paycheck Protection Program (PPP), where private lenders faced no credit risk but decided which firms to serve. Black‐owned firms obtained PPP loans primarily from automated fintech lenders, especially in areas with high racial animus. After traditional banks automated their loan processing procedures, their PPP lending to Black‐owned firms increased. Our findings cannot be fully explained by racial differences in loan application behaviors, preexisting banking relationships, firm performance, or fraud rates