Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240429 
Year of Publication: 
2021
Series/Report no.: 
WWZ Working Paper No. 2021/02
Version Description: 
June 2021 (replaces version of January 2021)
Publisher: 
University of Basel, Center of Business and Economics (WWZ), Basel
Abstract: 
Payment fintechs, acting as lenders, possess a potential solution to weak debt enforcement because of their ability to deduct a part of a merchant's digital sales towards loan repayment. Analyzing payments processed by an Indian fintech company offering sales-linked loans, we find that some borrowers discontinuously reduce sales flowing through the company immediately after the loan disbursal to circumvent repayment and strategically default. Using credit bureau scores sourced independently and the spatial and temporal heterogeneity in cash availability generated by a cash-crunch episode, we find that competition from other lenders and cash limits the effectiveness of this enforcement technology
Subjects: 
Fintech lending
limited enforcement
sales manipulation
regression discontinuity
JEL: 
G20
G21
G23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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