IMF Working Papers Volume 2021 Issue 214: Does IT Help? Information Technology in Banking and Entrepreneurship (2021)

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Does IT Help? Information Technology in Banking and Entrepreneurship

Author:

Toni Ahnert

Toni Ahnert
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Sebastian Doerr

Sebastian Doerr
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Mr. Nicola Pierri

Mr. Nicola Pierri
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https://orcid.org/0000-0002-3120-9670

, and

Mr. Yannick Timmer

Mr. Yannick Timmer
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Series:: IMF Working Papers

Volume/Issue:: Volume 2021: Issue 214

Language:: English

Publication Date:: 06 Aug 2021

DOI:: https://doi.org/10.5089/9781513591803.001

ISBN:: 9781513591803

ISSN:: 1018-5941

Pages:: 57

Keywords:: technology in banking; entrepreneurship; information technology; collateral; screening; banks' IT adoption; importance of information technology; IT in banking; startup activity; bank screening; Collateral; Self-employment; Employment; Job creation

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2021: Issue 214

Language:: English

Publication Date:: 06 Aug 2021

DOI:: https://doi.org/10.5089/9781513591803.001

ISBN:: 9781513591803

ISSN:: 1018-5941

Pages:: 57

Keywords:: technology in banking; entrepreneurship; information technology; collateral; screening; banks' IT adoption; importance of information technology; IT in banking; startup activity; bank screening; Collateral; Self-employment; Employment; Job creation

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper analyzes the importance of information technology (IT) in banking for entrepreneurship. To guide our empirical analysis, we build a parsimonious model of bank screening and lending that predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We provide empirical evidence that job creation by young firms is stronger in US counties that are more exposed to ITintensive banks. Consistent with a strengthened collateral lending channel for IT banks, entrepreneurship increases more in IT-exposed counties when house prices rise. In line with the model's implications, IT in banking increases startup activity without diminishing startup quality and it also weakens the importance of geographical distance between borrowers and lenders. These results suggest that banks' IT adoption can increase dynamism and productivity.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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