Small business owners’ Fintech credit in crises: Theory and evidence from farmers under the COVID-19

TY - JOUR

T1 - Small business owners’ Fintech credit in crises

T2 - Theory and evidence from farmers under the COVID-19

AU - Liu, Yun

AU - Zhang, Yun

AU - Zhang, Yifei

AU - Xiao, He

N1 - Funding Information: This work is supported by the Humanities and Social Science Youth Project of Ministry of Education [grant no. 19YJC790087 ]; Shanghai Philosophy and Social Sciences Project [grant no. 2021ZJB004 ]; and the Shanghai Pujiang Program [grant no. 18PJC086 ]. Publisher Copyright: © 2021 Elsevier B.V.

PY - 2022/2/1

Y1 - 2022/2/1

N2 - This paper examines the COVID-19 impact on Chinese farmers’ peer-to-peer (P2P) borrowings using transaction-level data. Our difference-in-differences estimation results suggest that farmers from the most pandemic-affected region, Hubei province, substantially reduced their P2P loans by 13% compared to other areas. The decline in P2P loans is mainly driven by the demand shrinkage, as we find a significantly lower equilibrium interest rate. Besides, we evaluate the lockdown policy, showing that provinces with larger logistics capacities exhibit more considerable credit declines. Overall, our study suggests that Fintech lending functions as an alternative financing channel during the pandemic, though the demand shrinkage dominates the supply.

AB - This paper examines the COVID-19 impact on Chinese farmers’ peer-to-peer (P2P) borrowings using transaction-level data. Our difference-in-differences estimation results suggest that farmers from the most pandemic-affected region, Hubei province, substantially reduced their P2P loans by 13% compared to other areas. The decline in P2P loans is mainly driven by the demand shrinkage, as we find a significantly lower equilibrium interest rate. Besides, we evaluate the lockdown policy, showing that provinces with larger logistics capacities exhibit more considerable credit declines. Overall, our study suggests that Fintech lending functions as an alternative financing channel during the pandemic, though the demand shrinkage dominates the supply.

KW - COVID-19 crisis

KW - Fintech credit

KW - Small business

UR - http://www.scopus.com/inward/record.url?scp=85121224928&partnerID=8YFLogxK

U2 - 10.1016/j.pacfin.2021.101692

DO - 10.1016/j.pacfin.2021.101692

M3 - Article

AN - SCOPUS:85121224928

SN - 0927-538X

VL - 71

JO - Pacific Basin Finance Journal

JF - Pacific Basin Finance Journal

M1 - 101692

ER -