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Shumiao Ouyang on Cashless Payment and Financial Inclusion?

Shumiao Ouyang
September 6, 2022
12:15 pm - 1:15 pm
Student Research Workshop

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Room 101

This paper evaluates the impact of mobile cashless payment on credit provision to the underprivileged. Using a representative sample of Alipay users that contains detailed information on their consumption, credit, and investment activities, I exploit a natural experiment to identify the real effects of cashless payment adoption. In this natural experiment, the staggered placement of Alipay-bundled shared bikes across different Chinese cities causes exogenous variations of the payment flow. I find that the use of in-person payment in a month increases the likelihood of gaining access to credit in the same month by 56.3%. Conditional on having credit access, a 1% increase in the in-person payment flow leads to a 0.41% increase in the credit line. Importantly, the positive effect of in-person payment flow on credit provision mainly exists for the less educated and the older, suggesting that cashless payment particularly benefits those who are traditionally underserved. I estimate a simple model to quantify the information value of payment data.