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Mobile internet, collateral and banking

Author

Listed:
  • Angelo D'Andrea

    (Bank of Italy)

  • Patrick Hitayezu

    (Research Hub)

  • Kangni Kpodar

    (International Monetary Fund and FERDI)

  • Nicola Limodio

    (Bocconi University)

  • Andrea F. Presbitero

    (International Monetary Fund and CEPR)

Abstract

Combining administrative data on credit, internet penetration and a land reform in Rwanda, this paper shows that the complementarity between technology and law can overcome financial frictions. Leveraging quasi-experimental variation in 3G availability from lightning strikes and incidental coverage, we show that mobile connectivity steers borrowers from microfinance to commercial banks and improves loan terms. These effects are partly due to the role of 3G internet in helping borrowers obtain information on land titles, used as a collateral for bank loans and mortgages. We quantify that the availability of collateral mediates 35% of the overall effect of mobile internet on credit and 80% on collateralized loans.

Suggested Citation

  • Angelo D'Andrea & Patrick Hitayezu & Kangni Kpodar & Nicola Limodio & Andrea F. Presbitero, 2024. "Mobile internet, collateral and banking," Temi di discussione (Economic working papers) 1454, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1454_24
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    References listed on IDEAS

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    More about this item

    Keywords

    banks; credit; high-speed internet; mobile; technological change;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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