Fintech credit, big tech credit and income inequality

Finance Research LettersVolume 51, January 2023, 103387

MartinHodulaab

a Czech National Bank, Department of Financial Stability, Czechia
bPrague University of Economics and Business, Department of Monetary Theory and Policy, Czechia

Received 29 August 2022, Revised 26 September 2022, Accepted 29 September 2022, Available online 2 October 2022, Version of Record 14 October 2022.

Abstract

The rise of alternative credit lines, powered by the digital revolution, comes with a promise of additional funding to the economy. In the paper, I explore whether the growth of fintech and big tech credit can be associated with changes in income inequality. For this purpose, I utilize a rich panel of 78 countries over the 2013–2019 period. I find that rise of fintech and big tech credit is indeed associated with a reduction in income inequality. However, this somewhat wanting result emerges only in countries with an already high level of financial inclusion.