Topic: FinTech Lending with Low-tech Pricing
Abstract: FinTech lending-known for using big data and advanced technologies-promised to break away from the traditional credit scoring and pricing models. Using a comprehensive dataset of FinTech personal loans, our study shows that loan rates continue to rely heavily on conventional credit scores, including 45% higher rates for nonprime borrowers. Other known default predictors are often neglected. Within each segment(prime/nonprime) loan rates are not very responsive to default risk, resulting in realized loan-level returns decreasing with risk. The pricing distortions result in substantial transfers from nonprime to prime borrowers and from low- to high-risk borrowers within segment.
Brief Bio: Professor Vincent Yao
Vincent Yao is the AREA Chair Professor, Professor of Real Estate, Professor of Finance and Director of Real Estate Centre in the J. Mack Robinson College of Business at Georgia State University in Atlanta, GA. He is also a senior research fellow at the Federal Re-serve Bank of Atlanta and a research fellow at the Hong Kong Monetary Authority. He holds visiting chair professorship at several universities. Prior to joining GSU, Professor Yao 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. Professor Yao's current research interests are household finance, real estate finance, and housing policies. His papers have been published in the American Economic Review, the Review of Economic Studies, Jour-nal of Financial Economics, the Review of Financial Studies, Management Science, and Journal of Urban Economics.
Time: 1 July 2023 (Saturday) 10:00-11:30pm
Moderator: Lu Yuanping (Executive Director, IIDPF)
Venue: Conference Room 119, Wenqin Building