Template-Type: ReDIF-Paper 1.0
Author-Name: Sebastian Doerr
Author-X-Name-First: Sebastian
Author-X-Name-Last: Doerr
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo
Author-X-Name-Last: Gambacorta
Author-Name: Luigi Guiso
Author-X-Name-First: Luigi
Author-X-Name-Last: Guiso
Author-Name: Marina Sanchez del Villar
Author-X-Name-First: Marina
Author-X-Name-Last: Sanchez del Villar
Title: Privacy regulation and fintech lending
Abstract: We find that, following the introduction of the CCPA, loan applications to fintechs increase by significantly more than those to traditional banks, leading to an increase in fintechs' market share by up to 19%. This increase can be attributed to applicants' increased willingness to share their data. Fintechs, taking advantage of this data, expand their utilisation of information beyond traditional credit scores during the application process. Consequently, they engage in more personalised pricing and reject a larger proportion of applications. These findings suggest that fintechs enhance their screening process, leading to an improvement in the quality of their average borrower. As a result, fintechs are able to offer significantly lower loan rates than banks can following the CCPA's implementation. In sum, the CCPA has benefited consumers by providing fintech lenders, equipped with advanced screening technology, with improved access to data.
Creation-Date: 2023-06
File-URL: https://www.bis.org/publ/work1103.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1103.htm
File-Format: text/html
Number: 1103
Keywords: data privacy, data sharing, fintech, privacy regulation, CCPA
Classification-JEL: G21, G23, G28
Handle: RePEc:bis:biswps:1103