Deciphering the Impact of BigTech Consumer Credit

Lei Chen, Wenlan Qian, Albert Di Wang, Qi WU

Abstract: The last decade has seen a significant boom in large technology companies (BigTechs) entering the credit market by integrating lending with their core business ecosystems. Using a novel dataset from a leading e-commerce BigTech, we address an under-examined question raised by this integration: How does BigTech credit (the lending business) shape users’ consumption patterns on the e-commerce platform (the core business)? In a randomized context, our stacked difference-in-differences analyses demonstrate a 19% increase in monthly spending among credit recipients. This is mainly driven by the increase in the purchase frequency, consisting of visit frequency and visit-to-purchase conversion tendency, rather than the amount spent per order. Credit-induced spending is more pronounced among individuals that have less access to traditional bank credit, are less active on the e-commerce platform, or reside in regions with better logistics infrastructure for e-commerce, highlighting the BigTech’s financial inclusion role and the synergy effect between its lending and core businesses. Credit recipients also demonstrate increased variety-seeking behavior, choosing a wider range of products and brands. Despite its strong consumption effects, we find no evidence that BigTech credit causes excessive spending, as it does not lead to higher discretionary spending or purchases of more expensive items. Additionally, neither higher spending boost nor higher credit limit is associated with higher delinquency rates.