The Use and Disuse of Fintech Credit: When Buy-Now-Pay-Later Meets Credit Reporting

We show that FinTech borrowers significantly reduce their BNPL usage when this loan information is set to be shared with banks after a credit reporting policy change. Borrowers with previous default records become more disciplined in repayment behaviors, proxied by lower default rates and overdue balances than those without such records. The disuse effect is more pronounced among younger borrowers, borrowers with higher consumption levels, and borrowers who have credit cards. Reduction in BNPL usage leads to decreased online consumption. We also find supporting evidence that Big Tech platforms' screening and monitoring technologies (imperfectly) substitute for formal enforcement institutions.