Small Business Owners’ Fintech Credit in Crises: Theory and Evidence from Farmers under the COVID-19

26 Pages Posted: 4 Jan 2022

See all articles by Yun Liu

Yun Liu

Shanghai Lixin Univeristy of Accounting and Finance

Yun Zhang

Shanghai Lixin University of Accounting and Finance

Yifei Zhang

The University of Hong Kong - Faculty of Business and Economics

He Xiao

BNU-HKBU United International College

Date Written: November 29, 2021

Abstract

This paper examines the COVID-19 impact on Chinese farmers’ peer-to-peer (P2P) borrowings using transaction-level data. Our difference-in-differences estimation results suggest that farmers from the most pandemic-affected region, Hubei province, substantially reduced their P2P loans by 13% compared to other areas. The decline in P2P loans is mainly driven by the demand shrinkage, as we find a significantly lower equilibrium interest rate. Besides, we evaluate the lockdown policy, showing that provinces with larger logistics capacities exhibit more considerable credit declines. Overall, our study suggests that Fintech lending functions as an alternative financing channel during the pandemic, though the demand shrinkage dominates the supply.

Keywords: Small business, COVID-19 crisis, Fintech credit

JEL Classification: D14, Q12, Q14

Suggested Citation

Liu, Yun and Zhang, Yun and Zhang, Yifei and Xiao, He, Small Business Owners’ Fintech Credit in Crises: Theory and Evidence from Farmers under the COVID-19 (November 29, 2021). Pacific-Basin Finance Journal, Vol. 71, No. 101692, 2022, Available at SSRN: https://ssrn.com/abstract=3996660 or http://dx.doi.org/10.2139/ssrn.3996660

Yun Liu

Shanghai Lixin Univeristy of Accounting and Finance ( email )

Shanghai
China

Yun Zhang

Shanghai Lixin University of Accounting and Finance ( email )

Yifei Zhang (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

He Xiao

BNU-HKBU United International College ( email )

China

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
54
Abstract Views
565
Rank
676,215
PlumX Metrics