Tech in Fin before FinTech : Blessing or Curse for Financial Stability? /
Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders' information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware u...
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| Formatua: | Aldizkaria |
| Hizkuntza: | English |
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Washington, D.C. :
International Monetary Fund,
2020.
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| Saila: | IMF Working Papers; Working Paper ;
No. 2020/014 |
| Sarrera elektronikoa: | Full text available on IMF |
| Gaia: | Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders' information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware used in US commercial bank branches after mapping them to their parent bank. We find that higher intensity of IT-adoption led to significantly lower non-performing loans when the crisis hit: banks with a one standard deviation higher IT-adoption experienced 10% lower non-performing loans. High-IT-adoption banks were not less exposed to the crisis through their geographical footprint, business model, funding sources, or other observable characteristics. Loan-level analysis indicates that high-IT-adoption banks originated mortgages with better performance and did not offload low-quality loans. We apply a simple text-analysis algorithm to the biographies of top executives and find that banks led by more 'tech-oriented' managers adopted IT more intensively and experienced lower non-performing loans during the crisis. Our results suggest that technology adoption in lending can enhance financial stability through the production of more resilient loans. |
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| Alearen deskribapena: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Deskribapen fisikoa: | 1 online resource (43 pages) |
| Formatua: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Sartu: | Electronic access restricted to authorized BRAC University faculty, staff and students |