Stress Testing Banks' Digital Capabilities: Evidence from the COVID-19 Pandemic

How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic

“…Erel and Liebersohn (2020) show that nonbank fintech lenders also gained importance in small-business lending during the pandemic, accounting for a substantial portion of Paycheck Protection Program (PPP) loans Kwan et al (2021). show that banks with stronger information technology (IT) capabilities originated more PPP loans and attracted more deposits during the pandemic.6 Bracke et al (2020) conduct a study similar in several respects to ours for the UK mortgage market, finding evidence of tighter credit standards and a drop in lending after the onset of the pandemic.…”

FinTech Lending

“…Furthermore, FinTech loans tilted more toward relatively lower-income borrowers and areas more affected by the 25 Of course, this does not mean that technology itself was not beneficial for lending efficiency over this period. Kwan et al (2021) use a measure of IT sophistication within banks participating in the PPP and find that more ITsophisticated banks originated more PPP loans within a given location, especially in areas with more severe COVID-19 outbreaks, higher levels of internet use, and higher bank competition. pandemic, similar in spirit to the PPP findings of Erel & Liebersohn (2021) discussed above.…”

Epidemic Exposure, Fintech Adoption, and the Digital Divide

“…A number of recent papers study the take-up and effects of financial technologies in the context of COVID-19. Kwan, Lin, Pursiainen, and Tai (2021) examine the relationship between banks' IT capacity and their ability to serve customers during the recent pandemic; using U.S. data, they show that banks with better IT capabilities saw larger reductions in physical branch visits and larger increases in website traffic, consistent with a shift to digital banking. In addition, they find that banks possessing more advanced IT originated more small business Paycheck Protection Program (PPP) loans.…”