On June 18th, ‘PBCSF Award for The Best Paper in FinTech’ Announced at Western Finance Association (WFA) Annual Meeting. The award is established and sponsered by XIN Real Estate FinTech Research Center at Tsinghua University Institute for FinTech Research. The paper How Costly Are Cultural Biases? Evidence from FinTech receives the award in 2021.
This paper was co-authored by Francesco D'Acunto of the Carroll School of Management at Boston College, Pulak Ghosh of Indian Institutes of Management, Rajiv Jainz of India Fair Value Technology Private Company and Alberto G. Rossi of Georgetown University.
To detect and quantify the effects of cultural biases in large-stake risky choices, the paper studies a leading Indian FinTech peer-to-peer lending platform paired with an automated robo-advising tool. Comparing the choices lending consumers (“lenders") make with those made by the robo-advising tool on their behalf, we find both in-group vs. out-group discrimination and stereotypical discrimination are pervasive and sizable. Discrimination affects performance negatively: discriminating lenders face 32% higher default rates and about 11% lower returns on the loans they issue to borrowers who belong to favored demographic groups relative to available borrowers in discriminated groups. The extent of discrimination is higher in locations in which cultural biases are salient, due to historical inter-ethnic conflict and political polarization.
On behalf of the School, Zhang Xiaoyan, associate dean and Xinyuan professor of finance of Tsinghua PBCSF, director of XIN Real FinTech Research Center of Tsinghua University National Institute of Financial Research, attended the conference.
WFA annual meeting is one of the most influential financial academic conference in the world. The purpose of the award is to encourage outstanding scholars around the globe in the field of FinTech research and promote academic exchanges, research development and innovation. This was the second year that the award presented at the conference.
