Regulatory constraint and small business lending: do innovative peer-to-peer lenders have an advantage?

Abstract This paper investigates whether innovative Peer-to-Peer lending by FinTechs’ has a regulatory advantage over the big banks in respect of small business lending. We do this through lens regulations imposed Dodd-Frank Act, using difference-in-difference methodology. The Act tightened traditional bank credit standards on loans, especially for firms. However, new FinTech lenders were not subject to same burden. find that significantly reduced their businesses, as compared competitors. Our results suggest while constrained models gained and capitalized this.