New Investment Study Findings Have Been Reported from Federal Reserve Bank of Philadelphia (The Impact of Fintech Lending On Credit Access for Us Small Businesses*): Investment

2024 AUG 05 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Current study results on Investment have been published. According to news reporting out of Philadelphia, Pennsylvania, by NewsRx editors, research stated, “Small business lending (SBL) plays an important role in funding productive investment and fostering local economic growth. Recently, nonbank lenders have gained market share in the SBL market in the United States, especially relative to community banks.”

Our news journalists obtained a quote from the research from the Federal Reserve Bank of Philadelphia, “Among nonbanks, fintech lenders have become particularly active, leveraging alternative data and complex modeling for their own internal credit scoring. We use proprietary loanlevel data from two fintech SBL platforms (Funding Circle and LendingClub) to explore the characteristics of loans originated pre-pandemic (2016-2019). Our results show that these fintech SBL platforms lent relatively more in zip codes with higher unemployment rates and higher business bankruptcy filings. Moreover, fintech platforms’ internal credit scores were able to predict future loan performance more accurately than traditional credit scores, particularly in areas with high unemployment. Using Y-14 M loan-level bank data, we compare fintech SBL with traditional bank business cards in terms of credit access and interest rates.”

According to the news editors, the research concluded: “Overall, while not all fintech firms follow the same approach, we find that fintech lenders could help close the credit gap, allowing small businesses that were less likely to receive credit through traditional lenders to access credit and potentially at lower cost.”

This research has been peer-reviewed.

For more information on this research see: The Impact of Fintech Lending On Credit Access for Us Small Businesses*. Journal of Financial Stability, 2024;73. Journal of Financial Stability can be contacted at: Elsevier Science Inc, Ste 800, 230 Park Ave, New York, NY 10169, USA. (Elsevier - www.elsevier.com; Journal of Financial Stability - http://www.journals.elsevier.com/journal-of-financial-stability/)

Our news journalists report that additional information may be obtained by contacting Julapa Jagtiani, Federal Reserve Bank of Philadelphia, Philadelphia, PA 19106, United States. Additional authors for this research include Giulio Cornelli, Jon Frost and Leonardo Gambacorta.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jfs.2024.101290. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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