Past Seminars and Events

Fintech Borrowers: Lax-Screening or Cream-Skimming?

Publish Time:2019-07-01

Date & Time:July 1, 2019  10:00 - 11:30a.m.

Venue:SEM411 Meeting Room

Speaker:Vincent Yao(Georgia State University)

Inviter:Hanming Fang


Did Fintech lenders ease credit access for borrowers underserved by the traditional banking? Are borrowers able to improve their credit outcomes through a personal loan by a Fintech lender? We address these questions using a unique individual-level data providing detailed information about borrowers’ credit histories and lenders’ identities and the Madden vs. Midland Funding, LLC case as source of exogenous variation. We find that Fintech borrowers earn more, live in higher income neighborhoods, are on average younger, and more likely to be professionals. However, we show that Fintech borrowers are significantly more likely to default and exhibit higher indebtedness than similar individuals borrowing from traditional financial institutions. Fintech borrowers tend to carry a significant credit card balance, and are more likely to consume the additional funds rather than using them to consolidate high-cost credit card debt. Overall, these findings suggest that Fintech lenders enable households with a particular desire for immediate consumption to finance their expenses and borrow beyond their means.

Speaker Biography:  

Dr.Vincent Yao is an associate professor at the Georgia State University. He received his Ph.D. in economics at the State University of New York at Albany in 2004. Prior to joining Georgia State, Yao spent more than nine years as the director of credit portfolio strategy and the director of underwriting analytics in Fannie Mae. He was responsible for monitoring and managing a credit portfolio of $3 trillion loans guaranteed and securitized by the company. He also managed models and policies used in underwriting millions of mortgage applications by American homeowners and was the business sponsor of corporate models used in credit risk management.

His current research interests are household finance, real estate finance, and housing policies. His papers have been published in the American Economic ReviewJournal of Financial EconomicsManagement ScienceJournal of Urban EconomicsReal Estate Economics, and Journal of Financial Intermediation etc. He is currently on the editorial board of Real Estate Economics – widely regarded as the leading journal in real estate.