Template-Type: ReDIF-Paper 1.0
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo
Author-X-Name-Last: Gambacorta
Author-Name: Fahad Khalil
Author-X-Name-First: Fahad
Author-X-Name-Last: Khalil
Author-Name: Bruno Maria Parigi
Author-X-Name-First: Bruno Maria
Author-X-Name-Last: Parigi
Title: Big Techs vs Banks
Abstract: We study an economy in which large technology companies, big techs, provide credit to firms operating on their platforms. We focus on two advantages that big techs have with respect to banks: better information on their clients and better enforcement of credit repayment since big techs can exclude a defaulting firm from their ecosystem. While big techs have both superior enforcement and complete and private information of the firm type big techs can encroach on banks' turf only if they guarantee some privacy to firms by tempering their drive to collect information about firm characteristics and leaving some rents to them. The way big techs share information i.e. by providing information publicly or in a private way entails different outcomes in terms of efficiency.
Length: 42 pages
Creation-Date: 2022-08
File-URL: https://www.bis.org/publ/work1037.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1037.htm
File-Format: text/html
Number: 1037
Keywords: big techs, credit markets, privacy, information sharing
Classification-JEL: E51, G23, O31
Handle: RePEc:bis:biswps:1037