Factors affecting to the probability of BigTech expanding to credit segment

Abstract

BigTech has been involved in many financial services in the financial market all over the world, including providing credit. This exerts a lot of pressures on the economy in general and commercial banks in particular. Therefore, this study explored the factors affecting the ability of BigTech in expanding its
financial activities into the credit sector in a country, thereby analyzing the possibility of BigTech expanding into this field in Vietnam. The study applied a linear probability model with a sample of observing data from 43 countries, including 12 countries where BigTech has been involved in the credit sector. Data are collected in 2016. It is concluded that there are 6 factors that affect BigTech’s ability to expand into the credit sector, including: (i) Economic crisis; (ii) Bank’s monopoly capacity index (the Lerner Index); (iii) Credit to Private non-financial sector from Banks; (iv) Mobile phone usage rate; (v) GDP growth rate; and (vi) GDP growth rate squared. Specifically, the Lerner Index, Credit to Private non-financial sector from Banks, Mobile phone usage rate and GDP growth rate squared have positive impacts on the possibility of BigTech expanding into the credit sector and the remaining have negative impacts on this possibility. From the above research results, the authors have related to the status of influencing factors in Vietnam and proposed some recommendations to encourage BigTech to develop as well as limit the risks they bring to Vietnamese commercial banks.