We examine how fintech development affects corporate innovation. Using the city-level fintech index that includes 331 cities, which is constructed based on data from Ant Finance Service Group, we identify the economic mechanisms through which fintech development affects technological innovation. We show that firms that are more financially constrained exhibit a disproportionally higher innovation level in cities with better developed fintech services. We further find that fintech development promotes lending to firms and stimulates R&D investment because internet credit intensifies bank loan competition. Our paper provides new insights into the effects of fintech development on the real economy

We study the impact of FinTech competition in payment services when a monopolist bank uses payment data to learn about consumers’ credit quality. Competition from FinTech payment providers disrupts this information spillover. The bank’s price for payment services and its loan offers are affected. FinTech competition promotes financial inclusion, may hurt consumers with a strong bank preference, and has an ambiguous effect on the loan market. Both FinTech data sales and consumer data portability increase bank lending, but the effects on consumer welfare are ambiguous. Under mild conditions, consumer welfare is higher under data sales than with data portability

This paper provides micro-level evidence on how FinTech adoption affects household consumption and consumption inequality. Our hypothesis is that through FinTech's payment facilitation and credit constraint alleviation, higher FinTech adoption by households fosters financial inclusion by promoting consumption. Financial inclusion is especially increased for households that traditionally consumed less, which suggests that FinTech could reduce consumption inequality. By combining region-level FinTech adoption measures with household-level representative data of consumption, we find that higher FinTech adoption by a household increases household consumption and reduces consumption inequality across households. Using the distance to Hangzhou from the city in which a household is located as an instrument variable to capture the exogenous variation in FinTech adoption yields results with similar economic and statistical significance. In addition, traditional financial infrastructure is still a prerequisite for the benign distributive impacts provided by FinTech credit, which demonstrates the need for further welfare-improving policies. Our paper adds to the literature by documenting FinTech to be a market force that contributes to financial inclusion

New technology promises to expand the supply of financial services to small businesses poorly served by banks. Does it succeed? We study the response of FinTech to financial services demand created by the introduction of the Paycheck Protection Program. FinTech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and more minority households, and in industries with fewer banking relationships. It is also greater in counties where the economic effects of the COVID-19 pandemic were more severe. Substitution between FinTech and banks is economically small, implying that FinTech mostly expands, rather than redistributes, the supply of financial services

We document the effects of the COVID−19 pandemic on digital finance and fintech adoption. Drawing on mobile application data from a globally representative sample, we find that the spread of COVID− 19 and related government lockdowns led to a sizeable increase in the rate of finance app downloads. We then analyze factors that may have driven this effect on the demand−side and better understand the “winners” from this digital acceleration on the supply−side. Our overall results suggest that traditional incumbents saw the largest growth in their digital offerings during the initial period, but that “BigTech” companies and newer fintech providers ultimately outperformed them over time. Finally, we drill−down further on the adoption of fintech apps pertaining to both the asset and liability side of the traditional bank balance sheet, to explore the implications that the accelerated trends in digitization may have for the future landscape of financial intermediation

We document that finance companies and FinTech lenders increased lending to small businesses after the 2008 financial crisis. We show that most of the increase substituted for a reduction in bank lending. In counties in which banks had a larger market share before the crisis, finance companies and FinTech lenders increased their lending more. We find no effect of reduced bank lending on employment, wages, and new business creation by 2016. Our results suggest that finance companies and FinTech lenders are major suppliers of credit to small businesses and played an important role in the recovery from the 2008 financial crisis

Certification by analysts on a FinTech platform that harnesses the “wisdom of crowds” is associated with successful initial coin offerings (ICOs). We show that favorable ratings by a group of analysts with diverse backgrounds positively predict fundraising success and long-run token performance. Analysts’ ratings also help detect potential fraud ex ante. We document that analysts have career concerns and are incentivized by the platform to issue informative ratings. Overall, our results suggest that a market-based certification process that relies on a diverse group of individuals is at play in financing blockchain startups

We examine how increased competition stemming from an innovation in financial technology influences sell-side analyst research quality. We find that firms added to Estimize, an open platform that crowdsources short-term earnings forecasts, experience a pervasive and substantial reduction in consensus bias and a limited increase in consensus accuracy relative to matched control firms. Long-term forecasts and investment recommendations remain similarly biased, alleviating the concern that the documented reduction in bias is a response to broad economic forces. At the individual analyst level, we find that bias reduction is more pronounced among close-to-management analysts, and that more biased analysts respond by reducing their coverage of Estimize firms. The collective evidence suggests that competition from Estimize improves sell-side research quality by discouraging strategic bias

I draw on new data to examine how donor-advised funds (DAFs), a fast-growing philanthropic option, relate to social progress. DAFs are distinguished by flexibility such as their ability to transform complex assets and separate the timing of tax breaks from giving decisions. While DAFs are often classified by their sponsor type, I introduce a new classification scheme that reflects their economic purpose, including the users targeted, style and features offered, and focus of grant making. This classification reveals that growth is fastest among DAFs that offer fintech tools, liquidity transformation, and grant making focused on diversity, equity, and inclusion. Conditional correlations show that DAFs with an innovative style of service distribute more grants to charities serving areas with high inequality, in times of greatest financial need, and with more efficient operations

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