US REGIONAL SMALL BUSINESS LENDING: IMPACT OF LIQUIDITY REGULATION AND FINTECH LENDERS

In this paper, we address whether small- and medium-sized enterprises are turning to FinTech peer-to-peer lenders as a result of decreased access to traditional bank lending. Such lenders have been shown to have a greater focus on Environmental, Social, and Governance principles. We investigate the impact of Basel III and the US Liquidity Coverage Ratio by way of a natural experiment. Our results suggest that these may have led to a decrease in traditional bank lending. We observe that FinTech lenders gained a regulatory advantage and that this can potentially be exploited. We suggest that this would help lending activities directed at sustainable economic growth.