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Privacy Regulation and Fintech Lending

2023; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.4353798

1556-5068

Sebastian Doerr, Leonardo Gambacorta, Luigi Guiso, Marina Sanchez del Villar,

Microfinance and Financial Inclusion

Consumers dislike sharing data with fintechs but better access to data can improve loan market outcomes. We study how the California Consumer Privacy Act (CCPA), which grants users control over and mitigates concerns about sharing data, affects bank and fintech lending. Difference-in-differences estimations show that the CCPA increases mortgage applications to fintechs relative to banks in California. Further evidence suggests that applicants' greater willingness to share data improves fintechs' screening process: they engage in more individualized pricing, deny more applications, and increase their use of non-traditional data. In turn, they offer lower loan rates, in particular to traditionally under-served groups.