Conference Agenda

Please note that all times are shown in the time zone of the conference. The current conference time is: 1st Nov 2024, 12:37:14am CET

 
 
Session Overview
Session
FI 06: FinTech and Lending Techniques
Time:
Friday, 18/Aug/2023:
8:30am - 10:00am

Session Chair: Thomas Chemmanur, Boston College
Location: 2A-33 (floor 2)


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Presentations
ID: 1549

Does Relationship Lending Discipline Disclosure? Evidence from Bailout Firms

Daniel Rabetti

Tel Aviv University, Israel

Discussant: Lakshmi Naaraayanan (London Business School)

Assessing the Paycheck Protection Program (PPP) --- a financial rescue program designed to cover firms' payroll expenses during the Covid-19 pandemic --- I document that the decision of managers whether to reveal the bailout loan details to the public dominates the disclosure strategy of firms that engage in relationship lending, especially for longer and more intense relationship. Examining potential economic channels, I find that strategic disclosure is unlikely to be driven by habit formation or liquidation concerns. Instead, the evidence suggests that strategic disclosure is driven by relationship capital considerations, where firms incur the costs of disclosing unfavorable news to reduce lenders' monitoring concerns in exchange for future lending benefits. Overall, the findings highlight a novel economic channel for releasing unfavorable information in which relationship lending has a disciplinary effect on firms' strategic disclosure, especially during times of crisis when debt monitoring becomes more relevant.

EFA2023_1549_FI 06_1_Does Relationship Lending Discipline Disclosure Evidence.pdf


ID: 1784

Old Program, New Banks: Online Banks in Small Business Lending

Elizabeth Bickmore, Andrew MacKinlay, Yessenia Tellez

Virginia Polytechnic Institute and State University, United States of America

Discussant: John (Jianqiu) Bai (Northeastern University)

While banks historically offer a litany of different credit and depository products to their local customers, technological innovation and consumer preferences have spurred growth of online banks specializing in particular activities across broad geographic areas. This paper analyzes the unintended consequences of online banks' specialized lending model on small business lending. We use loans in the SBA program, which provides guarantees to motivate partner-lenders to lend to higher-risk borrowers. We find that online banks expand credit access, lending in disadvantaged and underserved geographies. While providing credit, online banks target higher guarantees, generating a cross-subsidy from traditional lenders, borrowers, and the government to online lenders.

EFA2023_1784_FI 06_2_Old Program, New Banks.pdf


ID: 693

The Entrepreneurial Finance of Fintech Firms and the Effect of Fintech Investments on the Performance of Corporate Investors

Thomas Chemmanur1, Michael Imerman2, Harshit Rajaiya3, Qianqian Yu4

1Boston College, United States of America; 2University of California Irvine, United States of America; 3University of Ottawa, Canada; 4Lehigh University, United States of America

Discussant: Xiaoyun Yu (Shanghai Advanced Institute of Finance)

We analyze the effect of corporate investments in fintech startups on startup performance and on the future performance of investing firms. Corporate investment in fintech startups is associated with greater successful exit likelihood; more and higher quality innovation; and higher inflow of high-quality inventors. We establish causality using an IV analysis. A stacked difference-in-differences analysis shows that such investments enhance the product market performance and equity market valuation of corporate investors belonging to the financial services sector, but not those in the non-financial sector. We show that formation of strategic alliances between investors and fintech startups drive these performance improvements.

EFA2023_693_FI 06_3_The Entrepreneurial Finance of Fintech Firms and the Effect of Fintech Investments.pdf


 
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