Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289800 
Year of Publication: 
2024
Series/Report no.: 
IWH Discussion Papers No. 18/2022
Version Description: 
This version: 22.04.2024
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
This paper provides both theoretical and empirical analyses of the differences between BigTech lenders and traditional banks in response to monetary policy changes. Our model integrates Knightian uncertainty into portfolio selection and posits that BigTech lenders possess a diminishing informational advantage with increasing firm size, resulting in reduced ambiguity when lending to smaller firms. The model suggests that the key distinction between BigTech lenders and traditional banks in response to shifts in funding costs, triggered by monetary policy changes, is more evident at the extensive margin rather than the intensive margin, particularly during periods of easing monetary policy. Using a micro-level dataset of small business loans from both types of lenders, we provide empirical support for our theoretical propositions. Our results show that BigTech lenders are more responsive in establishing new lending relationships in an easing monetary policy environment, while the differences in loan amounts are not statistically significant. We also discuss other loan terms and the implications of regulatory policies.
Subjects: 
bank lending
financial technology
monetary policy transmission
JEL: 
E52
G21
G23
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.