Social capital and FinTech lending: international evidence

• Greater social capital leads to higher levels of FinTech lending. • Analyses a panel dataset of 56 countries for 2013–19. • Formal institutions, internet penetration and lower income inequality drive this impact. • Endogeneity addressed through 2SLS regressions and entropy balancing. FinTech credit has grown significantly in recent years and can have important economic and financial outcomes. Social capital can provide societal benefits which impact FinTech lending. There are three factors that influence this connection: the inequality of income, the prevalence of digital technology, and the quality of institutions. This paper examines the relationship between social capital and FinTech lending for a panel of 56 countries for 2013–19, focusing on these important conditioning factors. We find that that greater social capital results in higher levels of FinTech lending. These results are robust to different model specifications, after correcting for possible endogeneity issues, and over different indicators of social capital. This effect is more pronounced for countries with better institutions, higher internet penetration, and lower income inequality – highlighting the need for authorities to consider their impact when formulating policy.