The digital credit divide: marketplace lending and entrepreneurship

Research output: Contribution to journalArticlepeer-review

Abstract

We conjecture that marketplace lending provokes an increase in the quantity of entrepreneurship, particularly in more regionally disadvantaged areas, albeit at lower average quality. Using a fuzzy regression discontinuity design that exploits exogenous variation in borrowers’ access to marketplace loans along US state borders, we estimate a 10% increase in marketplace lending causes a 0.44% increase in business establishments per capita. The effects are more pronounced for less experienced entrepreneurs, for small and less profitable firms, firms more dependent upon external finance, in industries with lower sunk costs of entry, and for low-income regions with inferior access to financial institutions.

Bibliographic note

Not yet published as of 04/05/2021.

Details

Original languageEnglish
JournalJournal of Financial and Quantatative Analysis
Publication statusAccepted/In press - 10 Feb 2021

Keywords

  • Fintech, entrepreneurship, credit supply