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Determinants of FinTech and BigTech lending: the role of financial inclusion and financial development

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  • Peterson K. Ozili

    (Central Bank of Nigeria, Abuja, Nigeria)

Abstract

Credit markets around the world are undergoing digital transformation which has led to the rise in FinTech and BigTech lending. FinTech and BigTech lending is the provision of credit by FinTech and BigTech providers who have more capital, cutting-edge IT systems, worldwide recognition, greater online presence and are able to handle more big data on computers and mobile phones than traditional banks. FinTech and BigTech lending is growing in importance, but the determinants of FinTech and BigTech lending have received little attention in the literature. This study investigates the determinants of FinTech and BigTech lending. The study focused on the effect of financial inclusion and financial development on FinTech and BigTech lending. Using data for 18 countries from 2013 to 2019 and employing the difference-GMM and 2SLS regression methods, the findings reveal that financial inclusion and financial development are significant determinants of FinTech and BigTech lending. Financial development is a positive determinant of FinTech and BigTech lending while financial inclusion has a significant effect on FinTech and BigTech lending. Also, FinTech and BigTech lending lead to greater banking sector stability and also poses the risk of rising nonperforming loans. There is also a significant positive correlation between financial development and FinTech and BigTech lending. These findings add to the emerging literature on the role of FinTech and BigTech in financial intermediation. This research is significant because it provides insights into the role of financial inclusion and financial development in the digital transformation of credit markets.

Suggested Citation

  • Peterson K. Ozili, 2023. "Determinants of FinTech and BigTech lending: the role of financial inclusion and financial development," Journal of Economic Analysis, Anser Press, vol. 2(3), pages 66-79, May.
    • Handle: RePEc:bba:j00001:v:2:y:2023:i:3:p:66-79:d:45
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    References listed on IDEAS

    as
    1. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    2. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    3. OECD & World Bank & UN Environment, 2018. "Financing Climate Futures," World Bank Publications - Books, The World Bank Group, number 32517.
    4. Ozili, Peterson Kitakogelu, 2021. "Financial inclusion and legal system quality: are they correlated?," MPRA Paper 110518, University Library of Munich, Germany.
    5. Ozili, Peterson K, 2020. "Financial inclusion and Fintech during COVID-19 crisis: Policy solutions," MPRA Paper 111219, University Library of Munich, Germany.
    6. Ozili, Peterson K & Ndah, Honour, 2022. "Impact of financial development on bank profitability," MPRA Paper 111337, University Library of Munich, Germany.
    7. Ozili, Peterson K, 2021. "Banking sector earnings management using loan loss provisions in the Fintech era," MPRA Paper 105083, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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