Financial technology in developing economies: A note on digital lending in Turkey

H.D. Karaman, T. Savaser, M. Tiniç, G. Tumer-Alkan

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

© 2021 Elsevier B.V.We examine the differences in the loan performance of fintech and bank borrowers in Turkey. Using data of 5.5 million consumer loans by the fifth-largest private commercial bank in Turkey and its fintech subsidiary, we demonstrate that fintech borrowers are on average younger, better educated, have higher income and savings levels, pay less interest and have better credit history than traditional bank borrowers. Furthermore, fintech borrowers are less likely to default. Superior performance of fintech loans is driven by the fintech firm's ability to identify creditworthy borrowers among individuals with low-credit scores. These results contrast with the earlier evidence for developed markets where fintech borrowers are found to be more risky.
Original languageEnglish
Article number110012
JournalEconomics Letters
Volume207
DOIs
Publication statusPublished - 1 Oct 2021

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