Date: 16 Nov 2023 (Thu)
Capital Marketing Development: China and Asia
The Rise of E-wallets and Buy-now-pay-later: Payment Competition, Credit Expansion, and Consumer Behavior
16 November 2023, Thursday
10:00 am – 11:10 am, Thursday (Singapore Time, UTC+8)
[The Rise of E-wallets and Buy-now-pay-later: Payment Competition, Credit Expansion, and Consumer Behavior]
The past decade has witnessed a phenomenal rise of digital wallets, and the COVID-19 pandemic further accelerated their adoption globally. Such e-wallets provide not only a conduit to external bank accounts but also internal payment options, including the ever-popular Buy-Now-Pay-Later (BNPL). The authors examine, for the first time, e-wallet transactions matched with merchant and consumer information from a world-leading provider based in China, with around one billion users globally and a business model that other e-wallet providers quickly converge to. The authors document that internal payment options, especially BNPL, dominate both online and on-site transactions. BNPL has greatly expanded credit access at the extensive margin through its adoption in two-sided payment markets. While BNPL crowds out other e-wallet payment options, it expands FinTech credit to underserved consumers. Exploiting a randomized experiment, the authors also find that e-wallet credit through BNPL substantially boosts consumer spending. Nevertheless, users, especially those relying on e-wallets as their sole credit source, carefully moderate borrowing when incurring interest charges. The insights likely prove informative for economies transitioning from cash-heavy to cashless societies where digital payments and FinTech credit see the largest growth and market potential.
Lin William CONG, Rudd Family Professor of Management and Associate Professor of Finance, Johnson Graduate School of Management, SC Johnson College of Business, Cornell University
Wenlong BIAN, Associate Professor in Finance, Sungkyunkwan University, NSD/CCER
Yang JI, Associate Professor, Business School, Sun Yat-Sen University
Deniz AYDIN, Assistant Professor of Finance, Olin Business School, Washington University in St. Louis
About the Webinar
Financial market development goes hand-in-hand with economic growth. The development of China's capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China's capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analysing the positive and negative lessons in the functioning of Asia's capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets' allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.
The ABFER and the University of Chicago's Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.