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Working Paper
Fintech Innovations in Banking: Fintech Partnership and Default Rate on Bank Loans
We explore whether banks could leverage data and technology to expand their customer base without taking on more credit risk. Previous studies have not explored the impact of fintech partnerships on the quality of banks’ loan portfolios. Our analysis utilizes data on relevant bank– fintech partnerships and loan-level data from Y-14M reports. For credit cards, we find that banks that had fintech partnerships extended larger lines of credit to consumers with low credit scores or missing credit scores. We also find that credit card default rates declined among nonprime borrowers with missing ...
Working Paper
Owner-Occupancy Fraud and Mortgage Performance
We identify occupancy fraud — borrowers who misrepresent their occupancy status as owner-occupants rather than investors — in residential mortgage originations. Unlike previous work, we show that fraud was prevalent in originations not just during the housing bubble, but also persists through more recent times. We also demonstrate that fraud is broad-based and appears in government-sponsored enterprise and bank portfolio loans, not just in private securitization; these fraudulent borrowers make up one-third of the effective investor population. Occupancy fraud allows riskier borrowers to ...