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The impact of open banking on traditional lending in the BRICS

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  • Fang, Jianyu
  • Zhu, Jialiang

Abstract

This study examines the influence of open banking regulation on traditional bank loans in the emerging markets of the BRICS—Brazil, Russia, India, China, and South Africa. Utilizing bank-level and individual-level data, the paper reveals that the introduction of open banking significantly diminishes consumer loan lending by traditional banks. Additionally, consumer propensity to acquire loans from traditional banks decreases. The research provides empirical evidence of how open banking impacts both the supply and demand sides of individual loans from traditional banks. This paper contributes to the literature by highlighting the unique role of open banking in promoting financial inclusion in emerging economies.

Suggested Citation

  • Fang, Jianyu & Zhu, Jialiang, 2023. "The impact of open banking on traditional lending in the BRICS," Finance Research Letters, Elsevier, vol. 58(PA).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323006724
    DOI: 10.1016/j.frl.2023.104300
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    References listed on IDEAS

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    1. He, Zhiguo & Huang, Jing & Zhou, Jidong, 2023. "Open banking: Credit market competition when borrowers own the data," Journal of Financial Economics, Elsevier, vol. 147(2), pages 449-474.
    2. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    3. Manasa Gopal & Philipp Schnabl, 2022. "The Rise of Finance Companies and FinTech Lenders in Small Business Lending," The Review of Financial Studies, Society for Financial Studies, vol. 35(11), pages 4859-4901.
    4. Huan Tang, 2019. "Peer-to-Peer Lenders Versus Banks: Substitutes or Complements?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1900-1938.
    5. Xavier Vives, 2019. "Digital Disruption in Banking," Annual Review of Financial Economics, Annual Reviews, vol. 11(1), pages 243-272, December.
    6. Chen, Qi & Goldstein, Itay & Huang, Zeqiong & Vashishtha, Rahul, 2022. "Bank transparency and deposit flows," Journal of Financial Economics, Elsevier, vol. 146(2), pages 475-501.
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    Cited by:

    1. Wei, Haoqiang & Yue, Guiling & Khan, Noor Ullah, 2024. "Uncovering the impact of Fintech, Natural Resources, Green Finance and Green Growth on Environment sustainability in BRICS: An MMQR analysis," Resources Policy, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Open banking; BRICS; Consumer loans;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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