Publication Type
Working Paper
Version
publishedVersion
Publication Date
12-2025
Abstract
Many fintech lenders rely on standardized contract terms to support scale and operational speed. This paper examines whether modest tailoring of loan contracts can improve credit market outcomes. We conduct a randomized field experiment with a large fintech lender that varies loan due dates relative to borrowers' salary paydays. Synchronizing repayment schedules with income cycles reduces delinquency by 29.1% in the experiment and 15.7% in the administrative data. Effects concentrate among liquidity-constrained borrowers: young, low-income, and low-creditlimit individuals. Tailored repayment timing generates substantial economic benefits: borrowers save on overdue penalties, lenders accelerate cash flows, and improved repayment increases future credit access. The benefits persist over time and strengthen with borrower experience. Overall, the findings show that contract tailoring can enhance fintech's contribution to financial inclusion.
Keywords
FinTech, Contract Design, Payday, Household Finance, Financial Inclusion
Discipline
Contracts | Finance and Financial Management
First Page
1
Last Page
77
Identifier
10.2139/ssrn.5843882
Citation
HU, Jianfeng; SONG, Changcheng; and YU, Yang.
One size does not fit all: Contract design in FinTech lending. (2025). 1-77.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7864
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
External URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5843882
Additional URL
https://dx.doi.org/10.2139/ssrn.5843882