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BIDSA SEMINAR: TechFin in China: Credit Market Completion and its Growth Effect

Image of BIDSA SEMINAR: Learning & Privacy in Online Search
Room 5 E4 SR 04
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Yi Huang, The Graduate Institute Geneva

 May 4, 2018

Bocconi University, 2:30pm

Via Rӧntgen n. 1, Room 5 E4 SR 04

 


Abstract


Ant Financial provides automated credit lines to more than a million firms trading on Alibaba’s Taobao e-commerce platform. Monthly credit records show how TechFin mitigates local  credit supply frictions in China’s segmented credit market and extends the “frontier” of credit availability to firms with a low credit score. We use a discontinuity in the credit  decision algorithm to document that a firm’s credit approval and first-time online credit use boosts firm development in terms of sales and transaction growth. These findings reveal the scope of China’s credit market frictions and the beneÞts of new credit technologies in completing credit markets.