What Do Two Million Credit Lines Say About the FinTech Fragility?

Difang Huang

(Zhengyang Bao and Difang Huang (Monash University)The FinTech industry has mushroomed in China since 2007, but it is unclear how resilient is this new industry to crises. Combining two samples of FinTech and bank loan records spanning the outbreak of the COVID pandemic, we provide the first evidence on the fragility of the Chinese FinTech industry. The delinquency rate is more than tripled after the pandemic outbreak for FinTech loans, but there is no significant change in the rate for bank loans. We find both adverse selection and moral hazard explain the difference. These results suggest the need for special policy attention in the FinTech industry.

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