Lending technologies and consumer defaults in times of crisis: Evidence from Brazil

Abstract

We investigate the role of lending technologies in consumer credit defaults in Brazil before and during the COVID-19 pandemic. First, relationship borrowers are less likely to default than others before the pandemic. Second, this effect persists during the pandemic, but it becomes around 60 % smaller. Third, we document important heterogenous effects. Relationship borrowers of appliance finance default less during the pandemic than the ones of general-purpose cash loans. Finally, female relationship borrowers are less likely to default during the pandemic, plausibly because of the higher job uncertainty and the increase of informal jobs for Brazilian women during the COVID-19.