Sebastian Doerr, Bank for International Settlements

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.

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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.