Online Seminar – Does Fintech Substitute for Banks? Evidence from the Paycheck Protection Program

Professor Isil Erel, David A. Rismiller Chair in Finance, Academic Director of the Risk Institute, Fisher College of Business of the Ohio State University

New technology promises to expand the supply of financial services to borrowers poorly served by the banking system. Does it succeed? We study the response of fintech to financial services demand created by the introduction of the Paycheck Protection Program (PPP). We find that fintech is disproportionately used in ZIP codes with fewer bank branches, lower incomes, and a larger minority share of the population, as well as in industries with little ex ante small business lending. fintech’s role in PPP provision is also greater in counties where the economic effects of the COVID-19 pandemic were more severe. Using the predicted responsiveness of traditional banks to the program in areas where they have branches as an instrument, we also show that only a small fraction of borrowers substituted to fintech lenders when local traditional banks were not available.

Speaker bio

Isil Erel is the David A. Rismiller Chair in Finance and the academic director of the Risk Institute at the Fisher College of Business of the Ohio State University. She holds a PhD in financial economics from MIT Sloan School of Management. Her research spans a variety of areas within corporate finance, with particular emphasis on mergers and acquisitions, corporate governance, and banking. This research has been published in top finance journals such as the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies.

Professor Erel is a research associate at the National Bureau of Economic Research (NBER)’s Corporate Finance program and a research member at the European Corporate Governance Institute (ECGI). She also serves on the boards of the Foundation for the Advancement of Research in Financial Economics and the Risk Institute.

Professor Erel is an Editor of the Review of Corporate Finance Studies. She was the Associate Editor of the Review of Financial Studies, Journal of Banking and Finance, and Financial Management in the past. She is the 2010 recipient of the Pace Setters Faculty Research Award, the 2015 recipient of the Distinguished Faculty Award, and 2020 recipient of the Recognition Award for significant out of classroom contributions at the Fisher College of Business. She also received the Distinguished Referee Award from the Review of Financial Studies in 2012. Professor Erel teaches Financial Institutions courses in both graduate and undergraduate programs at the Fisher College of Business.

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Meeting ID: 917 5002 8841
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