Discussion paper

DP18216 Privacy regulation and fintech lending

Individuals have concerns about sharing data, but without access to personal information data-intensive fintechs cannot prosper, nor consumers benefit from their services. Well-designed privacy protection regulation needs to address this conflict. This p aper studies h ow the California Consumer Privacy Act (CCPA), a 2020 privacy law that grants users control over data and mitigates concerns over sharing them, affects bank and fintech lending in the mortgage market. Using a difference-in-differences strategy comparing counties along the California border, we establish that the CCPA increases loan applications to fintechs by significantly more than those to banks, raising fintechs’ market share by 19%. Consistent with an improved screening process due to applicants’ greater willingness to share data with fintechs, fintechs engage in more individualized pricing, deny a greater share of applications, and increase their use of non-traditional data. In turn, fintechs can offer significantly lower loan rates compared with banks after the introduction of the CCPA.


Doerr, S, L Gambacorta, L Guiso and M Sanchez del Villar (2023), ‘DP18216 Privacy regulation and fintech lending‘, CEPR Discussion Paper No. 18216. CEPR Press, Paris & London. https://cepr.org/publications/dp18216