Big Techs vs Banks by Leonardo Gambacorta, Fahad Khalil and Bruno M Parigi published by BIS (8/2022)
We study an economy in which large technology companies, big techs, provide credit to Örms operating on their platforms. We focus on two advantages that big techs have with respect to banks: better information on their clients and better enforcement of credit repayment since big techs can exclude a defaulting Örm from their ecosystem. While big techs have both superior enforcement and complete and private information of the Örm type big techs can encroach on banksí turf only if they guarantee some privacy to Örms by tempering their drive to collect information about Örm characteristics and leaving some rents to them. The way big techs share information i.e. by providing information publicly or in a private way entails di§erent outcomes in terms of e¢ ciency.
