Journal of Financial Economics· 2026Q1
Shadow banks on the rise: Evidence across market segments
- 9citations
- Q1SCImago
- 2026year
Short summary
Fintech shadow banks excel in uncollateralized lending, while non-Fintech shadow banks dominate collateralized markets, driven by technology and lower regulation, respectively.
AI-generated from the title and abstract; the full text is not read.
Key points
- Fintech shadow banks are more responsive in uncollateralized retail loan markets.
- Non-Fintech shadow banks show stronger responsiveness in collateralized retail loan markets.
- Technology is identified as the key advantage for Fintechs, leveraging digital payment adoption.
- Lower regulation is a significant advantage for non-Fintech shadow banks.
AI-generated from the title and abstract; the full text is not read.
Abstract
This paper examines the comparative advantages of shadow banks across market segments. Combining credit bureau data on retail loans in India with weather shocks as a proxy for credit demand, we show that Fintechs respond more in uncollateralized markets. In contrast, non-Fintech shadow banks exhibit stronger responsiveness in collateralized markets. Exploiting geographic heterogeneity in the adoption of digital payments, we identify technology as the key advantage for Fintechs. Leveraging four natural experiments, we document the significance of lower regulation for non-Fintech shadow banks. Our results suggest that the comparative advantage of shadow banks differs across market segments.
The authors' abstract, as published at the source. Journal of Financial Economics, 2026 · DOI ↗
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