Abstract: Open banking enables loan applicants to easily and securely share payment data with prospective lenders. In theory, this could broaden credit access by reducing information asymmetry but could also lead to price discrimination that exploits individuals’ preferences and behavioral traits. Using loan application data from a leading German FinTech lender in consumer credit, I document that observably riskier applicants (with lower credit scores) are more inclined to disclose data. Data sharing improves loan approvals, reduces interest rates, and is associated with lower ex post defaults. These findings suggest that data sharing via open banking can reduce adverse selection.
Discussant: Pulak Ghosh, Indian Insitute of Management-Bangalore
Abstract: This paper provides a general equilibrium model to examine the role of information technology when intermediaries facilitate creation and distribution of assets under the setting of adverse selection and market-illiquidity-based disciplining. Twoinefficiencies, i.e., production and allocative inefficiencies, are shown to arise in thiseconomy. Allowing intermediaries to operate, who purchase produced assets fromoriginator and then sell to uninformed buyers, is shown to have a potentially mixedeffect on social welfare—uninformed intermediation can be welfare reducing whenadverse selection is severe in the economy, while informed intermediation always improves social welfare.
Discussant: Vadim Elenev, Johns Hopkins University
Abstract: This study explores the impact of fintech using a novel occupation-level fintech exposure measure. Occupations with high fintech exposure experience a net decline in job postings, employment, and wages, but complementary and substitutive effects are both present in the cross section. Fintech blurs the sector boundaries, and workers with finance-and-technology combination skills are sought after no matter where they are currently employed. Firms respond to the shock by adjusting hiring strategies, reallocating talent internally, and pivoting innovations to new areas, with a resulting impact not nearly as negative as on workers. Innovative firms even gain in employment, sales, and productivity.
Discussant: Gerard Hoberg, University of Southern California
