The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
Sebastian Doerr, Bank for International Settlements
Privacy regulation and fintech lending
(with L. Gambacorta, L. Guiso and M. Sanchez del Villar)
This paper studies how the California Consumer Privacy Act (CCPA), a privacy law that grants users control their data and assuages concerns over sharing it, affects lending markets. To guide our empirical analysis we build a model with banks and a fintech that use data to screen applicants. The fintech has a superior screening technology, but applicants dislike sharing their data with it. The model predicts that privacy regulation makes applicants more willing to share their data, so loan applications with the fintech increase. More data allow for better screening and enable the fintech to offer lower interest rates. We empirically show that the introduction of the CCPA increases mortgage applications with fintechs relative to banks in California. Consistent with applicants’ greater willingness to share data, fintechs make greater use of non-traditional data to improve screening. In turn, they deny more applications and offer more favourable rates.