Financial Literacy Seminar Series

May 2, 2019

3:30 PM - 5:00 PM

Seminar V | Fintech Borrowers: Lax-Screening or Cream Skimming?

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Vincent Yao

AREA Professor of Real Estate, Georgia State University


George Washington University School of Business
Duquès Hall, Room 651
2201 G Street NW
(main entrance is on 22nd Street between G and H Streets)

Bio: Vincent Yao

Vincent Yao is the AREA Professor of Real Estate, Associate Professor, Director of Real Estate Center and Director of the College Ph.D. Program in the Robinson College of Business at Georgia State University in Atlanta GA, USA. He is also a senior research fellow at the Federal Reserve Bank of Atlanta and a research fellow at the Hong Kong Monetary Authority. He holds visiting chair professorship at several universities in China. He received his BA from Renmin University of China and Ph.D. in Economics from State University of New York at Albany.

Prior to joining GSU, he spent over nine years as a director in Fannie Mae, responsible for overseeing a credit portfolio of $3 trillion loans guaranteed and securitized by the company. He was also the business sponsor of corporate models used in credit risk functions.

His current research interests are household finance, real estate finance, and housing policies. His papers have been published in the American Economic Review, Journal of Financial Economics, Management Science, Journal of Urban Economics, Real Estate Economics, and Journal of Financial Intermediation etc.

His recent research has focused on the following areas:


Did Fintech lenders ease credit access for borrowers underserved by the traditional banking? Are borrowers able to improve their credit outcomes through a personal loan by a Fintech lender? We address these questions using a unique individual-level data providing detailed information about borrowers’ credit histories and lenders’ identities and the Madden vs. Midland Funding, LLC case as source of exogenous variation. We find that Fintech borrowers earn more, live in higher income neighborhoods, are on average younger, and more likely to be professionals. However, we show that Fintech borrowers are significantly more likely to default and exhibit higher indebtedness than similar individuals borrowing from traditional financial institutions. Fintech borrowers tend to carry a significant credit card balance, and are more likely to consume the additional funds rather than using them to consolidate high-cost credit card debt. Overall, these findings suggest that Fintech lenders enable households with a particular desire for immediate consumption to finance their expenses and borrow beyond their means.