Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • October 2021
  • Article
  • Review of Financial Studies

Fintech Borrowers: Lax Screening or Cream-Skimming?

By: Marco Di Maggio and Vincent Yao
  • Format:Print
ShareBar

Abstract

Personal credit is the fastest-growing segment of the consumer credit market, mainly driven by fintech lenders' staggering expansion. We study this market using a unique individual-level data, which covers most of the top fintech and traditional lenders, and provides detailed information about borrowers' credit histories. We show that fintech borrowers are significantly more likely to default than neighbor individuals with the same characteristics borrowing from traditional financial institutions. Fintech borrowers are more likely to experience only a short-lived reduction in the cost of credit, because their total indebtedness increases more than non-fintech borrowers a few months after loan origination. However, we show that fintech lenders' pricing strategy is likely to take this into account.

Keywords

Fintech; Lending; Consumer Finance; Credit History; Self-control; Present Bias; Financing and Loans; Personal Finance; Credit; Behavior

Citation

Di Maggio, Marco, and Vincent Yao. "Fintech Borrowers: Lax Screening or Cream-Skimming?" Review of Financial Studies 34, no. 10 (October 2021): 4565–4618. (LEAD ARTICLE and EDITOR'S CHOICE.)
  • SSRN
  • Find it at Harvard
  • Read Now

About The Author

Marco Di Maggio

Finance
→More Publications

More from the Authors

    • May 2023
    • Faculty Research

    Ava Labs: Navigating the Next Blockchain

    By: Marco Di Maggio and Wenyao Sha
    • 2023
    • Faculty Research

    Cryptocurrency Investing: Stimulus Checks and Inflation Expectations

    By: Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson and Jason Kotter
    • 2023
    • Faculty Research

    Avoiding Idiosyncratic Volatility: Flow Sensitivity to Individual Stock Returns

    By: Marco Di Maggio, Francesco Franzoni, Shimon Kogan and Ran Xing
More from the Authors
  • Ava Labs: Navigating the Next Blockchain By: Marco Di Maggio and Wenyao Sha
  • Cryptocurrency Investing: Stimulus Checks and Inflation Expectations By: Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson and Jason Kotter
  • Avoiding Idiosyncratic Volatility: Flow Sensitivity to Individual Stock Returns By: Marco Di Maggio, Francesco Franzoni, Shimon Kogan and Ran Xing
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College