Conference Agenda

FinTech is reshaping traditional financial services including small and medium-sized enterprise (SME) credit. This paper investigates whether FinTech adoption by UK banks “democratises” SME credit, with a focus on underserved markets and risk implications. We develop a theoretical model of bank lending in which FinTech can affect credit supply through two distinct channels: reducing the cost of serving geographically remote borrowers and improving the precision of borrower screening. The model generates testable predictions that allow us to empirically distinguish between these mechanisms. Using a measure of FinTech adoption based on bank–FinTech business relationships and granular loan level data, we find that FinTech adoption enables banks to extend larger, more affordable unsecured loans to SMEs, with benefits concentrated among low-risk, digitally assessable borrowers. The effects are strongest in rural regions, consistent with the model’s prediction that FinTech drives geographic inclusion by reducing the marginal cost of reaching underserved borrowers without physical branch infrastructure, rather than through improved information processing.

We examine the effects of less stringent non-financial disclosure regulation on operating costs and access to external financing for micro firms in Italy. Since 2016, firms below certain size thresholds have been exempt from filing reports with qualitative information that complements standard balance sheet items. Compliance rates were higher among older and more productive firms, in line with strategic considerations that play a role in influencing policy uptake. However, the benefits of simplified reporting appear limited: using a regression discontinuity design that exploits the multidimensional size cut-offs determining eligibility, we find no evidence of cost savings. Instead, we document a negative impact on ownership transfers and access to credit markets due to increased opacity, suggesting that reduced information disclosure to stakeholders may hinder business dynamism.

This paper develops an asset-pricing framework in which investors evaluate disaster outcomes relative to the entire anticipated distribution of disaster severities rather than a fixed benchmark. When realised outcomes fall sufficiently deep within this distribution, additional loss-sensitive marginal utility is activated, generating a valuation-side amplification of downside risk. The mechanism does not rely on higher disaster probabilities or heavier physical tails; instead, it raises the price of sufficiently adverse states through the endogenous breakdown of perceived safety.

Within this framework, we derive closed-form pricing results for equity and defaultable bonds. The model produces large equity premia under moderate curvature and shows that bond spreads reflect not only expected default losses but also the loss of a benchmark-safe role when claims can fail in bad states. The theory therefore extends disaster-based pricing from risky premia to fragility premia on nominally safe assets.

More generally, the framework identifies a distinct tail-fear component in the conditional price of disaster risk. Because this component concentrates in sufficiently adverse states, deep out-of-the-money put options provide a natural empirical counterpart for identifying the left-tail pricing wedge implied by the model.

We study product innovation in the UK mortgage market by analysing when and how attributes outside the traditional structure of mortgage contracts become pricing relevant. To do so, we develop a stylised framework that treats mortgage products as structured bundles of attributes, focusing on the two-part tariff, comprising interest rates and fees, to infer innovation from pricing patterns. Our empirical strategy first uses transaction-level data and exploits within-product variations over time to detect when new product features affect pricing, which we apply to the case of green mortgages. Matching Energy Performance Certificates (EPCs) to UK mortgage originations, we show that EPCs become pricing-relevant in 2018, with lenders starting to offer pricing discounts for loans to buy properties with higher energy efficiency. We also use offer-level data on advertised green products to precisely estimate pricing discounts. We detect considerable green discounts, which reach up to 15 basis points in 2022. Mortgages against high EPC properties are concentrated in new buildings, suggesting relaxed credit constraints and increased housing investment, with implications for the broader economy.