Digital Banking Support to Small Businesses amid COVID-19: Evidence from China
Prepared by: Tao Sun, Alan Feng, Yiyao Wang, Chun Chang
DISCLAIMER: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
This note analyzes the economic impact of digital lending to micro and small sized enterprises (MSEs) in China during the coronavirus disease (COVID-19) pandemic. A preliminary analysis of a large pool of MSEs served by a digital bank indicates that digital banks were able to remotely evaluate borrowers and sustain lending during the pandemic, thereby facilitating the business continuity, sales growth, and financial inclusiveness of MSEs. In the global context, a policy framework—leveraging the advantages of digital banks and empowering digital banks, while guarding against possible financial stability risks—would further support small businesses during and after the COVID-19 pandemic.