PhD thesis defence by Marina Sanchez Del Villar Santamaría
This thesis contains three independent essays studying recent trends in financial intermediation: bank office closures and the functioning of fintechs in lending marktes.
In the first chapter, joint with Jin Cao, Ismael Moreno-Martinez, and Kasper Roszbach, we investigate the impact of bank branch closures on household finances in Norway. We combine a novel dataset of bank presence with individual tax records spanning from 2004 to 2019. We find that households exposed to a bank branch closure experience significant declines in wealth, debt acquisition, and home ownership rates. We find evidence consistent with soft information losses driving the results. These effects underscore the continuing importance of physical bank presence for households, even in an era of increasing digital banking.
The second chapter, co-authored with Sebastian Doerr, Leonardo Gambacorta, and Luigi Guiso, examines the effects of the California Consumer Privacy Act (CCPA) on fintech lending. By granting consumers control over their data, the CCPA enhances fintech lenders’ ability to offer lower interest rates, particularly benefiting traditionally underserved groups. Our findings suggest that privacy regulations like the CCPA can benefit fintechs over banks and enhance access to credit.
In the third chapter, I develop a theoretical model to explore why fintechs have not driven traditional banks out of the lending market. The model’s starting point is fintechs’ superior screening abilities, which allow them to offer lower rates, while traditional banks maintain an edge in monitoring borrower performance post loan issuance. These characteristics reflect how technological advancements affect competition between traditional banks and fintechs. Moral hazard post loan issuance decreases the informational advantage coming from better screening and implies that the fintech may not always have a market presence if it cannot properly discipline the borrower.