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Journal of Financial Economics Vol. 146 No. 1 2022

Can FinTech reduce disparities in access to finance? Evidence from the Paycheck Protection Program

Isil Erel1,2; Jack Liebersohn3

1 European Corporate Governance Institute · 2 The Ohio State University · 3 University of California, Irvine

Abstract

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.

DOI
10.1016/j.jfineco.2022.05.004
Volume
146
Issue
1
Pages
90-118
Language
en
Sources
crossref bibtex:phds-export.bib openalex

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