Small business owners’ Fintech credit in crises: Theory and evidence from farmers under the COVID-19

This paper examines the COVID-19 impact on Chinese farmers’ peer-to-peer (P2P) borrowings using transaction-level data. Our difference-in-differences estimation results suggest that farmers from the most pandemic-affected region, Hubei province, substantially reduced their P2P loans by 13% compared to other areas. The decline in P2P loans is mainly driven by the demand shrinkage, as we find a significantly lower equilibrium interest rate. Besides, we evaluate the lockdown policy, showing that provinces with larger logistics capacities exhibit more considerable credit declines. Overall, our study suggests that Fintech lending functions as an alternative financing channel during the pandemic, though the demand shrinkage dominates the supply.