A shift towards household lending during the Fintech era: the role of financial literacy and credit information sharing

Abstract

Purpose

This study aims to investigate the determinants of a shift in lending towards household sectors during the growth of fintech credit using a sample of 41 countries between 2015 and 2018.

Design/methodology/approach

This study uses a fixed-effects model by adding indicators for geographic areas and year dummy variables to achieve this objective.

Findings

The findings show that the household credit to firm credit ratio is positively associated with credit information sharing and financial literacy, emphasising the importance of credit information sharing mechanism and financial literacy to household credit growth. More interestingly, the findings show that fintech credit development plays a more critical role in the evolution of firm credit than household credit. Nonetheless, fintech credit development may complement the growth of conventional lending. The results still hold when using several robustness checks.

Originality/value

This is the first attempt to examine the roles of credit information sharing, financial literacy and fintech credit development in a shift in lending activities towards households.

Citation

Le, T.D. (2023), "A shift towards household lending during the Fintech era: the role of financial literacy and credit information sharing", Asia-Pacific Journal of Business Administration, Vol. 15 No. 3, pp. 466-485. https://doi.org/10.1108/APJBA-07-2021-0325