Fintech credit, big tech credit and income inequality

•The paper explores whether the growth of fintech and big tech credit can be associated with changes in income inequality.•Innovations in digital lending are not guaranteed to be manifested in a decrease in income inequality, especially if the initial level of financial inclusion is low.•In countrie...

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Bibliographic Details
Published inFinance research letters Vol. 51; p. 103387
Main Author Hodula, Martin
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.01.2023
Subjects
Big tech
Digital lending
Fintech
Inclusion
Income inequality
D63
E51
Income inequality
Inclusion
D31
Fintech
G23
O31
Digital lending
Big tech
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Summary:•The paper explores whether the growth of fintech and big tech credit can be associated with changes in income inequality.•Innovations in digital lending are not guaranteed to be manifested in a decrease in income inequality, especially if the initial level of financial inclusion is low.•In countries with low levels of financial inclusion, benefits from rising fintech and big tech credit volumes are greater for those at the high end of the income distribution. The rise of alternative credit lines, powered by the digital revolution, comes with a promise of additional funding to the economy. In the paper, I explore whether the growth of fintech and big tech credit can be associated with changes in income inequality. For this purpose, I utilize a rich panel of 78 countries over the 2013–2019 period. I find that rise of fintech and big tech credit is indeed associated with a reduction in income inequality. However, this somewhat wanting result emerges only in countries with an already high level of financial inclusion.
ISSN:1544-6123
1544-6131
DOI:10.1016/j.frl.2022.103387