Legal Enforcement and FinTech Credit: International Evidence

Hongfeng Peng, Jiao Ji, Hanwen Sun, Haofeng Xu

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Previous studies have shown that the quality of legal institutions is negatively associated with the interest rates of business loans. Fintech lending, with improved ex ante risk-sharing practices that change the approach to credit provision, presents a challenge to the traditional relationship between law and finance. Compiling and studying over five million fintech loans from 24 countries, we show that, in comparison to traditional bank loans, the quality of legal enforcement matters less to the cost of fintech credit. Nonetheless, the impact of legal protection on the interest rates of fintech credit is more persistent when (1) the loans bear higher risk, (2) the fintech platforms have fewer risk-sharing tools, and (3) borrowers’ jurisdictions have fewer information-sharing channels. Our study contributes to the debate on the role of legal protection in the fintech credit market.
Original languageEnglish
Pages (from-to)214-231
Number of pages18
JournalJournal of Empirical Finance
Early online date11 Mar 2023
Publication statusPublished - 1 Jun 2023

Bibliographical note

Funding Information:
Hongfeng Peng acknowledges the financial support from National Natural Science Foundation of China ( 72273073 ).


  • Fintech credit
  • Information sharing
  • Legal enforcement
  • Risk sharing

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance


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