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