Discussion paper

DP14221 On Fintech and Financial Inclusion

The cost of financial intermediation has declined in recent years thanks to technological progress and increased
competition. I document this fact and I analyze two features of new financial technologies that have stirred
controversy: returns to scale, and the use of big data and machine learning. I argue that the nature of fixed
versus variable costs in robo-advising is likely to democratize access to financial services. Big data is likely to
reduce the impact of negative prejudice in the credit market but it could reduce the effectiveness of existing
policies aimed at protecting minorities.


Philippon, T (2019), ‘DP14221 On Fintech and Financial Inclusion‘, CEPR Discussion Paper No. 14221. CEPR Press, Paris & London. https://cepr.org/publications/dp14221