The 2007 Global Financial Crisis brought great challenges to individuals (i.e., underbanked) and small and medium enterprises (SME) to obtain liquidity through traditional channels (i.e., banks). Simultaneously the global crisis also gave rise to other opportunities such as the emergence of marketplace lending and crowdfunding (e.g., P2P platforms) which enabled “fast” liquidity to the un- and under-banks as well as SMEs.
But the question that begs to be asked is whether the emergence of fintechs, as a liquidity provider, has a “dark side”? For example, the working paper, , Burlando, Kuhnk & Prina (2023) argue that “controlled” liquidity might actually “improve lender profitability and help consumers avoid default”, but doesn’t this go against a fintech’s objective? Would this “control” stifle innovation?
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