Financial technology in developing economies: A note on digital lending in Turkey

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Date

2021

Authors

Tiniç, Murat
Savaser, Tanseli
Tinic, Murat
Tumer-Alkan, Gunseli

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Elsevier Science Sa

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Abstract

We examine the differences in the loan performance of fintech and bank borrowers in Turkey. Using data of 5.5 million consumer loans by the fifth-largest private commercial bank in Turkey and its fintech subsidiary, we demonstrate that fintech borrowers are on average younger, better educated, have higher income and savings levels, pay less interest and have better credit history than traditional bank borrowers. Furthermore, fintech borrowers are less likely to default. Superior performance of fintech loans is driven by the fintech firm's ability to identify creditworthy borrowers among individuals with low-credit scores. These results contrast with the earlier evidence for developed markets where fintech borrowers are found to be more risky. (C) 2021 Elsevier B.V. All rights reserved.

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Digital lending, Innovation, Financial technology, Consumer loans

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4

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Source

Economics Letters

Volume

207

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