Journal of Banking & Finance Vol. 163 2024
Mortgage lending through a fintech web platform. The roles of competition, diversification, and automation
open access
Abstract
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.
- DOI
- 10.1016/j.jbankfin.2024.107194
- Volume
- 163
- Pages
- 107194
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref