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Equilibrium. Quarterly Journal of Economics and Economic Policy
Volume 19 Issue 1 March 2024
p-ISSN 1689-765X, e-ISSN 2353-3293
www.economic-policy.pl
Copyright © Instytut Badań Gospodarczych / Institute of Economic Research (Poland)
This is an Open Access article distributed under the terms of the Creative Commons Attribu-
tion License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use,
distribution, and reproduction in any medium, provided the original work is properly cited.
ORIGINAL ARTICLE
Citation: Waliszewski, K., Cichowicz, E., Gębski, Ł., Kliber, F., Kubiczek, J., Niedziółka, P.,
Solarz, M., & Warchlewska, A. (2024). Digital loans and buy now pay later from LendTech
versus bank loans in the era of ‘black swans’: Complementarity in the area of consumer fi-
nancing. Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278.
https://doi.org/10.24136/eq.2982
Contact to corresponding author: Krzysztof Waliszewski, krzysztof.waliszewski@ue.poznan
.pl
Article history: Received: 29.02.2023; Accepted: 5.03.2024; Published online: 30.03.2024
Krzysztof Waliszewski
Poznan University of Economics and Business, Poland
orcid.org/0000-0003-4239-5875
Ewa Cichowicz
SGH Warsaw School of Economics, Poland
orcid.org/0000-0002-9379-9127
Łukasz Gębski
SGH Warsaw School of Economics, Poland
orcid.org/0000-0002-5370-3987
Filip Kliber
Poznan University of Economics and Business, Poland
orcid.org/0000-0002-1278-6771
Jakub Kubiczek
University of Economics in Katowice, Poland
orcid.org/0000-0003-4599-4814
Paweł Niedziółka
SGH Warsaw School of Economics, Poland
orcid.org/0000-0002-1659-7310
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
242
Małgorzata Solarz
Wroclaw University of Economics and Business, Poland
orcid.org/0000-0001-9538-0541
Anna Warchlewska
Poznan University of Economics and Business, Poland
orcid.org/0000-0003-0142-7877
Digital loans and buy now pay later from LendTech versus bank
loans in the era of ‘black swans’: Complementarity in
the area of consumer financing
JEL Classification: D14; G23; K36
Keywords: FinTech; LendTech; buy now pay later (BNPL); black swan; consumer finance; digitalisa-
tion
Abstract
Research background: People who take non-banking loans are primarily perceived as exclud-
ed from accessing bank services. The growth of e-commerce and the increasing digitalisation
of customer interactions with banks was particularly accelerated by the COVID-19 pandemic
(the first ‘black swan’). These processes have also influenced the rapid growth of the
LendTech (LT) sector within FinTech with its digital loans and buy-now-pay-later (BNPL)
services. The war in Ukraine (the second ‘black swan’) has led to an energy crisis, increased
inflation, interest rates and credit costs, and reduced credit accessibility. In this context, the
following research questions are addressed: Are the LT and banking sectors complementary
or substitutive in the area of consumer financing? Does complementarity apply to all customer
segments and loan amounts? How does the extent of complementarity or substitutability of
the LT sector depend on, and to what extent do changes in the regulatory and macroeconomic
environment affect, the interaction between the banking and LT sectors?
Purpose of the article: The aim of the article is to identify trends in the LT sector within
FinTech in the context of assessing the scale and determinants of current and future comple-
mentarity of the non-bank sector and the banking sector in the area of consumer credit in time
of black swans. An additional purpose of the article is to estimate revenues from the basic
operating activities of companies from the on-line channel.
Methods: The research process was multi-stage and the research procedure was structured.
Due to the lack of a uniform source of data on LT products and services, the study used many
data sources
—
data from the Credit Information Bureau, a primary nationwide survey on LT
users a primary survey of people representing LT's managerial staff. The selection of LTs was
carried out according to the concept of the monetary sampling unit. The Horvitz-Thompson
estimator with Sen-Yates-Grundy variance form was used to estimate net operating income
for LT from the online channel in 2021.
Findings & value added: The LT companies surveyed state that black swans (the COVID-19
pandemic and the war in Ukraine) and the current macroeconomic situation have not signifi-
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
243
cantly affected demand for non-banking loans. The reduction in the opportunities for the LT
sector as a result of anti-usury regulations will only lead to a shift in consumer demand to the
pawnshop sector and the shadow economy, which will be detrimental to consumers. Com-
plementarity between LT and the banking sector is revealed especially in crisis situations, thus
limiting the effects of market shock (limited supply of loans offered by banks). In periods of
stabilisation, a rather clear division of preferences is noticeable – in the case of seniors and
loans for higher amounts, banks dominate, while in the case of lower amounts and in younger
age groups, non-bank institutions are more popular. The mechanism by which shrinking
banking services are replaced by LT in short-term crises confirms the importance of LT in
balancing the Consumer Finance market in the face of unstable periods. From a medium- and
long-term perspective, it should be noted that inflation and rising interest rates will increase
the scale of credit exclusion in commercial banks, shifting part of the demand to the non-bank
sector. These phenomena have an international dimension. Similar observations were made
already in 2012 by the CFPB in the USA and the British FTA, when analysing the consumer
finance market immediately after the subprime crisis, emphasising the effects of limiting
access to bank consumer loans and the resulting growth of the LT market (Gębski, 2013).
Introduction
4 March 2024 marks four years from when the first case of COVID-19 was
diagnosed in Poland. In Europe, the pandemic officially began several days
earlier — i.e., on 21 February 2020, when SARS-Cov-2 was confirmed in
a resident of Lombardy in Italy. In many countries, a total lockdown was
decreed for a period of two years, or even more, and restrictions on move-
ment were introduced. This resulted in a significant chunk of economic
activity moving online.
Exactly two years later, the Russian Federation attacked Ukraine, thus
sparking the most serious military crisis in Europe since the end of the war
in Yugoslavia (1992–1995). Shortly after the invasion, European currencies
declined against the U.S. dollar and most of the European stock indices,
especially in Central and Eastern Europe, fell sharply. At the same time, the
prices of commodities produced by Russia and Ukraine, like crude oil,
natural gas and wheat, soared (Fiszeder & Małecka, 2022). From a political
and economic perspective, the war in Ukraine caused a shockwave that
had a direct impact on the economies of countries that sourced their energy
supplies from Russia. The risk of shortages of gas, crude oil and coal, high
inflation and rising credit costs have highlighted the real risk of a global
economic crisis.
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
244
Black swans1 shook the markets, causing serious economic disruption
on many levels. They also led to major changes in competition on the con-
sumer finance market. Commercial banks became decidedly more active in
the online distribution channel, so far dominated by LendTech (LT) being
a segment of FinTech (FT). At the same time, the traditional division into
banking clients and customers of non-banking credit institutions blurred.
According to the Credit Information Bureau (BIK 2020; 2022), most custom-
ers in the loan sector were bank customers who, due to the burgeoning
demands made by banks, were forced to seek financing from non-bank
financial institutions (NBFI). The dominant age groups of customers in the
LT sector as NBFIs are 25–34 (35%) and 35–44 (27%).
Because of the outbreak of the pandemic, the European consumer fi-
nance market experienced its first deep breakdown. A Eurofinas study
(2020) shows that lending fell in all major market segments. In the first 6
months of 2020, an 18.4% drop in the value of lending was recorded in
Europe and the number of consumer loans granted decreased by over 21%.
Similar observations were made during research conducted by Choi (2020),
Jorda et al. (2020), who observed a short-lived but significant drop in pro-
duction and lending due to COVID-19. Maliszewska et al. (2020) also noted
a reduction in consumption and investment.
BIK confirmed that the data observed on the Polish market largely com-
plies with pan-European trends. In Poland, however, instalment loans ex-
perienced a positive dynamic (+34%). This may have resulted from the low
costs of such loans and the fact that consumers perceived a real risk of get-
ting sick and decided to ‘panic buying’. In times of crisis, epidemic or war,
consumer behaviour seems to indicate that people try to regain a sense of
control through excessive purchasing — more information is provided by
research made by Loxton et al. (2020). ‘Panic buy’ as a natural behavior
observed in the banking sector and in the market generally in time of crisis
can be exemplified through the asset bubble mechanism (Aliber et al., 2023).
A comparison of the situation in 2020 and 2022 shows that the supply
and demand shock caused by the pandemic was short-lived. After a sharp
decline in the volume of lending and the rapid adaptation of financial insti-
tutions to the new market reality, there was a rebound and another period
of rapid market development began, lasting uninterrupted until February
1
A ‘Black Swan’ is a phenomenon that is considered so improbable as to be practically
impossible, but it does occur from time to time and has a colossal impact on the reality that
surrounds us (Taleb, 2007).
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
245
2022. Uncertainty caused by the outbreak of war in Ukraine and the ac-
companying increase in loan costs caused a deep and much more pro-
longed collapse in the dynamics of the credit market. According to BIK
data, even an almost 31.4% increase in the value of loans granted by NBFI
was not able to compensate for the decrease in the volume of loans fi-
nanced by banks.
The aim of the article is to identify trends in the LT sector within
FinTech in the context of assessing the scale and determinants of current
and future complementarity of the non-bank sector and the banking sector
in the area of consumer credit in time of black swans. An additional pur-
pose of the article is to estimate revenues from the basic operating activities
of companies from the on-line channel. We would like to analyse the im-
pact of ‘black swans’ on the consumer finance market — in particular, the
activity of non-bank financial institutions and their reactions in terms of
adapting business models to new market circumstances. Here, LT and Buy
Now Pay Later (BNPL) services have started to supplement banking prod-
ucts. Many LTs have entered market sectors previously controlled by
commercial banks — financing instalment purchases, offering credit cards,
while also creating their own credit products such as deferred payments.
The tightening of bank lending policy created favourable conditions for
bank loans to be replaced by enterprises from the loan sector for customers
who found themselves in a worse financial situation.
We identified a research gap in the perception of the complementarity
of digital loans and payment deferral services offered by lending compa-
nies during the period of market shock caused by the Covid-19 pandemic
and Russia's aggression against Ukraine, and in research on non-bank
products replacing bank loans conducted from both the point of view of
customers and loan companies. Taking into account this gap in particular,
as well as the previously cited arguments in favour of the topicality of this
issue, we saw a need to identify the scale and scope of adjustment reactions
in the LT sector and the impact of black swans, in order to finally deter-
mine customer segments and the scale and determinants of the sector's
complementarity non-bank and banking in the area of consumer credit. We
understand complementarity as a situation in which the services offered by
LT can complement the offer of banks during periods of crisis (market
shocks), which, due to the appraisal of the situation and supervisory rec-
ommendations, make adjustments to the credit risk assessment of their
clients. During this period, economically weaker borrowers can obtain fi-
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
246
nancing from LTs, which remain more open to risk. As a consequence, the
crisis situation on the financial market does not have the same strong ef-
fects on consumers — who would otherwise be excluded from the financial
market — with all the consequences of this fact such as financial and social
exclusion (Ozili, 2020). This approach is consistent with the approach pro-
posed by Deeg (2005) based on assumption that the core idea of comple-
mentarity is that the coexistence (within a given system) of two or more
institutions mutually enhances the performance contribution of each indi-
vidual institution — in essence, that the whole is more than the sum of its
parts.
The study included a critical analysis of the literature and secondary
BIK data, formulating conclusions from a survey conducted among a rep-
resentative group of NBFI taking into account the value of the loan grant-
ed. The Horvitz-Thompson estimator with the Sen-Yates-Grundy variance
form was used to estimate net operating income for the entire LT sector
from the online channel.
The first part of the article focuses on an analysis of the literature, fol-
lowed by the results of the survey and an analysis of BIK secondary data
characterizing the activity of NBFI on the Polish consumer credit market.
The article ends with a discussion and conclusions drawn from the anal-
yses.
Literature review
The FT characteristics, taxonomy and market development drivers
The term FT emerged in economic literature in the 1990s, and since then
has been widely explored (Jalal et al., 2024). In the broad sense, FT should
be understood as the use of innovative technology to improve processes or
to offer new financial products, and in the narrow sense, ‘the financial ser-
vices sector created by entities that are not traditional providers of financial
services, using innovative technologies to more effectively provide existing
financial services and creating new ones’ (Harasim & Mitręga-Niestrój,
2018, p. 173). FT is sometimes equated with BigTech (BT), but the distinc-
tion between FT and BT is that the essence of BT is to offer digital services,
not necessarily financial ones, although BT is increasingly involved in offer-
ing digital financial services via its databases, thereby becoming a de facto
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
247
FT (Feyen et al., 2021). FT functions in various business models, described,
inter alia, by Tanda and Schena (2020) and Fischer (2021), while Temelkov
(2020) compares the business models of traditional banks, neobanks and
FT. One of the conclusions of the above research is that business models
overlap in certain strategic areas, and in the case of small banks in particu-
lar, the level of individualisation of digitisation strategies and the degree of
differentiation from the u-profile is relatively low. A review of research on
FT conducted by Takeda and Ito (2021) allows for a general division of FT
companies into existing enterprises or start-ups and (based on the criterion
of value obtained from innovation) into entities offering new products or
improving process efficiency. Nevertheless, the dissection of the FT market
carried out by KPMG (2021) distinguishes 12 segments: LT, middle & back
office, neobanking, payments, blockchain and cryptocurrencies, regtech,
crowdfunding, insurtech, data and analysis, personal finance management,
capital markets and wealthtech. Focusing on one of the above-mentioned
segments, such as LT, the sector may be defined as one that specialises in
offering digital loans — i.e., financing obtained via electronic channels,
without the need to go to the lender’s facility (Agarwal & Chua, 2020).
The development of FT should be associated with demand, supply and
regulatory factors (Harasim & Mitręga-Niestrój, 2018). Demand determi-
nants result from the expectations of customers (especially the Y and
Z generations) that financial products will be simpler to use, with faster
processes, at lower costs. The expectations in these diverse areas cannot be
met by the banking sector. The development of technology is, in turn,
a supply aspect supporting FT. New technologies in finance have funda-
mentally changed the image of competition on the loan market, which was
previously limited to the banking sector (Kowalewski & Pisany, 2022).
Business models regarding payments are shifting from banks being able to
charge for payments or bundle them with other financial products, to pay-
ments being bundled with other non-financial services and offered for free.
Such a change creates a niche for FT and provides an incentive for banks to
reorient their business models towards reducing the dependence of per-
formance on payment revenues (World Bank, 2022). When analysing the
reasons why FT developed, it should be noted that the focus of digitisation
has recently shifted from streamlining traditional tasks to introducing new
financial services and products. Focusing on the factors underlying FT de-
velopment, one might recall the findings obtained by Haddad and Hornuf
(2019), who point out that countries with a well-developed economy and
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
248
easily available venture capital tend to have relatively more FT. The devel-
opment of this market is also positively influenced by the number of Inter-
net servers, mobile telephony subscriptions and workforce qualifications.
In addition, the more difficult it is to access credit, the greater the satura-
tion of the LT economy. Equally, an active and LT-friendly regulatory poli-
cy affects the development of this sector (Tapanainen, 2020). Imam et al.
(2022), using data from the World Bank, reach the conclusion that FT insti-
tutions have relatively better development prospects in countries with
a positive attitude towards entrepreneurship and foreign capital invest-
ment. In turn, Didier et al. (2022) argue that FT companies shape the finan-
cial sector in terms of products, business models and industrial organisa-
tion mainly in emerging markets and developing economies. These authors
also document that FT activity is positively related to information and
communication technologies (ICT) and financial infrastructure. The above
leads to the conclusion that the role of FT (including LT) in the economy
and its relationship with the banking sector, is largely determined by ex-
ternal factors related to the regulatory and legal environment as well as by
attitude to financial innovation.
Interactions between LT and banking sector. The complementarity hypothesis.
One of the key issues remains to determine whether the LT competes
with the banking sector or fills a niche that is not and will not be exploited
by banks. Di Maggio and Yao (2021) state that initially digital lenders target
customers with lower creditworthiness who have experienced debt arrears.
This would support the complementarity hypothesis however the authors
add that only after obtaining a certain market share LT businesses tighten
their lending criteria and start to compete with banks. Chrzanowski and
Dąbrowski (2021) concentrate on the evolution of the market structure un-
der the influence of the development of the LT sector and conclude that
traditional banks and LT do not change the spectrum of financial products
and services they offer. This finding supports the concept of competition
between LT and the banking sector. One ought to point out that the scope
and intensity of competition between LT and banks depends on the struc-
ture of the banking sector on the local market and conditions regarding the
development of the FT sector. Kowalewski and Pisany (2022), analysing
data from 72 countries between 2013 and 2018, reveal that domestic and
private banks face increasing and negative competition from technological
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
249
financial companies than from foreign banks. Hodula (2022), based on data
from 78 countries, proves that the market model in which banks and LTs
complement each other prevails in countries where banking sectors are
dispersed and more stable. In markets with a highly concentrated banking
sector, LT loans substitute bank credit. The competition between LT and
banking sectors may result in weakening of the financial stability. Yeo and
Jun (2020) analyse the impact of the non-bank loan market on the risk of
insolvency and liquidity of banks. They compare a market without the
participation of the LT sector with a variant in which loan companies oper-
ate only in the low creditworthiness segment, while banks operate in each
segment. Supplementing the credit market with loan companies means that
the risk of bank insolvency increases due to the liberalisation of the rules
for granting loans determined by competition from loan companies. Final-
ly, it may also be that only in certain client segments there is competition,
while in others the activities are complementary. Eça et al. (2022), based on
data from the Peer-to-Business platform, show that LT can service SMEs
with high creditworthiness that already have access to bank loans. Compa-
nies with low liquid assets and own capital use loan companies to obtain
long-term unsecured loans and reduce their debt to banks. Companies
using LT enhance their leverage and replace long-term bank debt with non-
bank debt. Tang (2019) concludes that non-bank loans are a substitute for
bank loans in terms of servicing borrowers with a low level of creditwor-
thiness but complement bank products in the case of small loans.
Taking into account the different principles of creditworthiness assess-
ment, pricing, as well as a number of other factors (e.g., the speed and ease
of obtaining financing), there is a growing dominance in the literature of
studies pointing to the complementary nature of the banking and LT sec-
tors. A kind of confirmation of the complementarity hypothesis can be
found in the significant degree of separation of the banks' and LT’s cus-
tomer and products sets as well as distinct characteristics of bank and LT
portfolios.
The difference in the approaches of LT and banks in terms of assessing
creditworthiness — thanks to new algorithms created by LT, based on dif-
ferent criteria — naturally drives loan companies to search for customers
among people who have been refused funding by banks (Di Maggio et al.,
2022; Branzoli & Supino, 2020). This is one of the reasons for the develop-
ment of the LT sector. In this context, Hau et al. (2019) demonstrate that LT
loan products are relatively more attractive to borrowers with low credit
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
250
scoring who do not meet the criteria set by banks. de Roure et al. (2019),
when investigating the German consumer credit market, indicate that loans
granted by loan companies are riskier, while their cost (adjusted for risk) is
lower than those involved in bank loans. How LT is positioned in relation
to the banking sector is largely dictated by the regulations imposed on
banks. Additional capital and liquidity requirements, introduced as a re-
sponse to the global financial crisis, usually result in banks tightening their
lending policy, thereby opening up the playing field for LT enterprises
(Thakor, 2020), which do not have to comply with the strict supervisory
regulations specific to the banking sector (Nguyen et al., 2021). Buchak et al.
(2018), analysing the American mortgage market in 2007–2015, estimate
that the increased regulatory burdens faced by traditional banks and the
development of financial technologies may be responsible for approximate-
ly 70% and 30% of the growth of the shadow banking market, respectively.
However, the spectrum of areas where LT businesses do not compete with
banks is narrowing along with the tightening of supervisory regulations
regarding the LT sector, including the reduction of the maximum level of
the interest rate (Waliszewski, 2020). In turn, Moro-Visconti et al. (2020)
indicate the scalability of LT operations, which means that certain customer
segments will not be covered by banking services because the market value
is too low. Tamara et al. (2021), based on data from the Indonesian market,
conclude before the COVID-19 pandemic, the P2P lending sector did not
affect the lending activity of small banks and its clientele consisted mainly
of unbanked people. In turn, during the pandemic, the share of customers
using bank loans and non-bank loans both increased significantly. So, both
types of institutions have grown more complementary. LT enterprises,
filling the void created by the banking sector, become complementary to
banks, helping to satisfy consumers’ financial needs better, ostensibly in
the relatively poorly developed low-income credit markets (Bazarbash et
al., 2020), while at the same time causing an increase in total household
debt (Li et al., 2022). This complementarity applies to selected segments of
customers or products, as pointed out by Jakubowska-Branicka et al. (2020),
analysing the differences between the average value of a bank cash loan
and the equivalents of this product on the non-banking market. LTs are
expanding where there is underdevelopment of banking services. The find-
ings obtained by Erel and Liebersohn (2020) also support the complemen-
tarity hypothesis. These authors suggest that non-bank internet loans
granted to small enterprises (including the self-employed) are mainly taken
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
251
out in areas inhabited by people with relatively lower incomes, with fewer
banking outlets and in industries where small businesses tend not to attract
much financing. Jagtiani and Lemieux (2018) analysing loans granted to
individuals prove that the LT sector develops in regions with a relatively
weaker level of economic development, with a low density of bank branch-
es.
In the case of FT not focused on granting loans, it is more a case of co-
operation rather than competition with the banking sector. The synergy
created by cooperation between banks and FT is noted by PwC (2017). This
is also confirmed by Fischer (2021), while Folwarski (2020) states that the
competition for banks is primarily BT and not FT. FT can support the bank-
ing sector, helping to increase its efficiency, reduce risk and information
asymmetry, and ultimately improve competitiveness. Lăzăroiu et al. (2023)
point to the above benefits in the context of FT's use of artificial intelligence
algorithms. A similar position, emphasising the gains from the symbiosis of
FT and the banking sector, is represented by Andronie et al. (2023). They
claim that thanks to FT there is an optimisation of processes in the banking
sector, which at the same time creates opportunities to expand the availa-
bility of banking products and services.
Finally, the literature review conducted by Elsaid (2023) indicates that it
is not expected that FT substitute banks. However, banks have to accelerate
the adoption of innovations and advanced technology to compete with FT.
The strategic partnerships and cooperation between FT and banks shall
bring benefits for both sides.
The black swans influence on the LT sector
The outbreak of the COVID-19 pandemic caused a significant increase
in uncertainty in the financial sector. Banks focused on reviewing their loan
portfolios and assessing their own resilience to the crisis (Korzeb &
Niedziółka, 2020). By the time state support for borrowers was implement-
ed and supervisory regulations were modified, their lending policies had
tightened, and the LT sector had prevented the financial exclusion of many
existing bank customers (Waliszewski et al., 2023).
Ozili et al. (2024), claiming that the lockdown restrictions contributed to
higher interest in FT and digital finance solutions, also highlight the role of
shadow banking in the financial inclusion process. These results are con-
sistent with the findings of Bao and Huang (2021), who additionally docu-
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
252
ment that during the COVID-19 pandemic LT companies were more likely
to extend credit to new and financially constrained customers. However,
this led to a significant increase in the share of NPLs. The deterioration in
the quality of LT companies' portfolios was largely because customers us-
ing both bank and non-bank loans, having limited debt service capacity,
chose to repay bank loan instalments. The rapid growth of non-bank lend-
ing during the pandemic is also pointed out by Tamara et al. (2021), but
they did not find a corresponding slowdown in bank lending.
Pandemic contributed to FT growth not only in lending, but also in
payments and settlement. Tut (2023), referring to the case of Kenya, proves
that COVID-19 accelerated consumers' adoption of FT and digital onboard-
ing. Also Fu and Mishra (2022) conclude that lockdowns resulted in an
essential growth of finance app downloads. Guang-Wen and Siddik (2023)
suggest that FT adoption during COVID-19 significantly influenced green
finance, green innovation and environmental performance. When analys-
ing consumer attitudes toward the FT sector during the pandemic, one
should recall the findings of Adamek and Solarz (2023) who demonstrated
that consumers’ adoption of digital lending services was determined by
perceived attitude, trust, risk, usefulness and financial health, while per-
ceived ease of use and innovation did not turn out to be the statistically
significant variables. Singh and Singh (2023) also found that during the
COVID-19 pandemic attitude had a considerable impact on usage of FT
apps.
Russia's armed aggression against Ukraine, the second black swan, is an
example of the materialisation of geopolitical risks with a significant nega-
tive impact on financial stability and the performance of financial institu-
tions resulting in growth of uncertainty in financial markets (Caldara &
Iacoviello, 2022). The channels of the war's influence on the banking sector
and indirectly on banks' lending and investment policies are presented by
Bernardelli et al. (2023), while Vu et al. (2023) compared the impact of three
extraordinary events, namely Brexit, COVID-19 and the outbreak of war in
Ukraine, on the performance of European banks and their stability. These
authors suggest that Brexit had the least relative impact, which is probably
explained by the greater predictability of its consequences. The conclusions
of the above studies (mainly the increase in uncertainty reducing the risk
appetite of banks) indirectly apply to LT as a complementary sector. Based
on them, and due to a decline in purchasing power (Lin et al., 2023), de-
mand for non-bank loans is expected to increase. However, this financing
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
253
will serve more as a necessary supplement to the household budget, and
less as a source of financing for additional, standard of living-enhancing
purchases.
So far, research on the impact of the outbreak of war in Ukraine on the
FT has been focused on analysing changes in the stock prices of FT compa-
nies and their justification. Abbassi et al. (2023) conclude that the war in
Ukraine proves the sensitivity of stock returns of listed companies to geo-
political risk, especially companies whose performance is affected by
changes in trade organisation. Hasan et al. (2023) indicate that FT stock
markets are relatively less sensitive than traditional stock markets to an
increase in geopolitical risk. This may confirm the belief that the value of
FT companies depends less on their tangible assets, the aforementioned
turbulence in the trade area, and the expectation that the conflict and its
associated risks will generate demand for new services provided by the FT.
Indeed, it should be emphasised that technology start-ups typically do not
have significant fixed assets. The entrepreneurial idea, the founder's skills,
knowledge, and ability to execute this idea affect their valuations (Balcer-
zak et al., 2023). However, it cannot be said that the outbreak of war in
Ukraine has had an impact on FT stock prices. Abakah et al. (2023) prove
that the Economic Sanctions Sentiment Index has positive (or negative)
effect on the returns of FT stocks in a bullish (or bearish) market.
The outbreak of war in Ukraine has caused a significant increase in in-
flation, with the inflation rate in food prices exceeding the CPI. This has not
been followed by wage growth, which altogether contributes to a signifi-
cant decline in the purchasing power of households (Grunert et al., 2023).
The above phenomenon raises the question of the quality of LT and bank
portfolios, and how much, due to the deterioration of customers' creditwor-
thiness, the demand for LT loans will increase.
Research methods
This paper features a pioneering survey of leading LT companies in Po-
land.
Therefore, the research process was multi-stage and the research proce-
dure was structured. Due to the lack of a uniform source of data on LT
products and services, the study used many data sources to determine
whether it is complementary to banking products. This allowed not only to
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
254
achieve the assumed goal, but also to give a broad picture of the role of LT
in creating the lending sector in Poland. The first source of data was the
Credit Information Bureau, from which information was obtained on the
characteristics of LT customers and the dynamics of demand for their offer.
The second source of data was the primary study conducted in September
2022, a nationwide study was conducted using the CAWI technique on LT
users whose socio-demographic characteristics were consistent with the
distribution of customers of loan institutions provided by the Credit Infor-
mation Bureau (table 1). The sample included 200 households that had at
some point used LT products. An extensive discussion of the research pro-
cedure and sample characteristics is contained in the article (Waliszewski et
al., 2023). The third source of data was a primary survey of people repre-
senting LT's managerial staff. The selection of LTs was carried out accord-
ing to the concept of the monetary sampling unit, which was justified by
the structure of the LT sector, which is dominated by a few institutions. The
use of monetary sampling allowed to ensure that the sample included sig-
nificant institutions of the LT sector. The Horvitz-Thompson estimator with
Sen-Yates-Grundy variance form was used to estimate net operating in-
come for LT from the online channel in 2021. The detailed methodology of
the survey among LT lending institutions is presented in the next subsec-
tion.
The following research hypotheses were formulated:
Main hypothesis
MH. LT products (digital loans and BNPL) are complementary to bank loans in
times of shock (e.g. black swans) when banks limit their risk exposure, tighten their
lending policy leading to a reduction in the availability of bank credit.
Detailed (auxiliary) hypotheses:
HP1. During market stability, banks and LT operate independently due to differ-
ences in the product (amount, length of financing) and customer profile (borrow-
er’s age, average income, risk level).
HP2. The crisis affects consumer behaviour in such a way that despite having
access to loan products offered by banks after the crisis, they remain LT customers.
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
255
The use of multiple data sources and multi-stage research procedures
allowed for the verification of hypotheses in a way that combined induc-
tive and deductive reasoning. The first step was to present the structure of
the LT sector and the recognition of individual LTs, as well as to discuss
the role of the online channel in the distribution of LT products, because, as
research shows, it constitutes the basis of LT activity and is one of the fac-
tors distinguishing the distribution strategy from the banking offer. The
profit from the online channel was estimated. The next stage was to profile
LT customers and identify similarities and differences with people indebt-
ed to banks. Moreover, it was determined how LTs are perceived by cus-
tomers and how they are positioned in relation to banks. The impact of
black swans on the LT sector was then assessed.
Sampling frame
Information from the Financial Ombudsman, who published a list of en-
terprises operating in the loan sector in 2021, was chosen as the sampling
frame. It met all the criteria of being complete, up-to-date and identifiable
(Jensen, 1926). In addition, it offers additional information on the market
share of a particular enterprise, calculated by the proportion of the amount
a given enterprise owes the Financial Ombudsman relative to the entire
sum owed throughout the entire loan institution sector. Loan institutions
are obliged to pay a contribution to the Financial Ombudsman based on
their amount of total assets (0.02%).
The purpose of this part of the study was to determine the value of in-
come from loans granted by the entire LT sector via the online channel in
2021. The difficulty of obtaining filled-in questionnaires made it necessary
to use a small sample size, as well as small-area estimation methods. In
addition, there are many LTs on the market with a low market share.
Therefore, a monetary sampling plan was used, also taking into account
market share as an additional feature — i.e., the larger the company’s mar-
ket share, the greater the likelihood of this company being selected for the
sample.
Monetary sample
The probability of first-order inclusion takes the following form (Tillé,
2006, p. 18):
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
256
(1)
It should be noted that if the values of the additional feature clearly dif-
fer in plus from the average, then there may be a case where the individual
probabilities of first-order inclusions will be greater than one (
).
Then, according to the algorithm for the variable with the highest
, the
values (
) are assumed, which means the deliberate placement of the
element in the sample. Then, the first-order inclusion probabilities for the
remaining objects are re-estimated. These steps are repeated until
[0,1]
for each i.
Global value estimation
One of the basic approaches to estimating the global value in a popula-
tion when the sample size is small is to use the Horvitz-Thompson estima-
tor (Horvitz & Thompson, 1952):
(2)
If
>0, the variance estimator is given by:
!
"#
$
$
%&
$
'
$
$
(3)
Note that this estimator can have negative values. If
!
( (for
i=1,…,N; j=1,…,N, i≠j) then the Sen (1953) and Yates-Grudny (Yates &
Grudny, 1953) estimator will accept only non-negative values:
)*+
,
!
$
$-
%&
$
'
$
$
(4)
Execution
The R language was used with sampling and samplingbook libraries. In
order to estimate the probabilities of first-order inclusions, the inclu-
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
257
sionprobabilities2 function (formula 1) was used, while the UPtillepi2 func-
tion was used to calculate the probability of second-order inclusions. Selec-
tion according to the assumptions of the monetary sample was performed
using the Uptille function3.
Then, a questionnaire was sent to representatives of the randomly se-
lected enterprises. Information on the online share in revenue was collect-
ed. For each company audited, financial statements were used to obtain
information on total revenue from basic operating activities in 2021. After
multiplying the online share and the total revenue from basic operating
activities, the amount of revenue from the online channel was estimated
(expressed in PLN), having previously defined first- and second-order
inclusion probabilities to estimate the global value using the HT estimator
(formula 2) and two estimators of its variance (Formula 3 and 4).
Results
The LT market
LT is not a single market as companies operate in many segments. The LT
companies surveyed do not focus on just one type of loans but try to diver-
sify their activities. It is worth emphasizing, however, that none of the LT
enterprises studies offers insurance.
LT institutions actively seek new areas of operation. Among the re-
spondents, 25% operate on the BNPL market. The main channel of LT ac-
tivity is the Internet. Among the indicated sales channels, as many as 25 out
of 32 happen online. Other forms should be treated as complementary or
attempts to diversify sales channels. This is confirmed by the 8 out of 11 of
LT companies for which the online channel accounted for over 70% of prof-
it, including e-commerce platforms, while as many as 5 are exclusively
online (100% of profit).
All respondents (LT clients and non-LT clients) were asked about brand
awareness of individual LT companies that make up the Polish non-bank
2
Due to the large market share for PROVIDENT, according to the selected sampling
scheme, the probability of first-order inclusion for this company is 1.
3
Set.seed(446850) is set to ensure the replicability of the results. This value is random –
each member of the research team in turn gave the number without knowing the number
given by the previous person.
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
258
loan market. Only in the case of three LTs did more people know the com-
pany than did not (cf. Fig. 3). In Poland, the most recognisable LT enter-
prise is Provident (80% of responses), Wonga (76% of responses), and Vi-
vus.pl (67% of responses). According to the data from the Financial Om-
budsman for 2021, Provident has the largest share in the LT market, fol-
lowed by Smartney, Everest Finanse, Profi Credit Polska, while Wonga and
Vivus have 5 and 6 shares, respectively. Comparing the recognition of LT
brands with market share, it should be stated that among the 6 most popu-
lar, there are 5 with the largest market share.
Estimated income from loans obtained online
It was estimated that in 2021, online loans generated a revenue of PLN
1,601,052,453 for the entire LT sector. However, it is estimated that these
values deviate on average by 17.85% — i.e., PLN 285,795,354 — from the
value of the estimator (formula 4). Considering data from the Central Sta-
tistical Office on revenue from the basic operating activities of the entire
loan sector in 2021, which amounted to PLN 2,767,731,000 (Central Statisti-
cal Office, 2022), revenue from the sale of loans via the online channel
amounted to approx. 60%.
LT clients
The demand on the loan market in Poland largely consists of people
who have loans and credit (BIK, 2020, p. 20). As many as 71.7% of those in
debt have both, with 19.6% who used to have credit but now have loans,
and 8.7% with loans who have never had credit. In addition, in the case of
low amounts — i.e., up to PLN 1,000 — as much as 90.2% consists of loans,
while the remaining 9.8% is cash credit (BIK, 2021, p. 15). The larger the
debt, the greater the share of cash credit. In the case of amounts of PLN 9–
10,000. PLN, cash credit accounts for as much as 52.8%, while loans are
47.2% (BIK, 2021, p. 16). The complementarity of loans and credit is also
due to the fact that holders of cash credit take out loans — in 2022 this was
8.4%, and with the increase in the amount of cash credit, the percentage of
those taking out loans at the same time increased — for debt amounting to
over PLN 50,000, it is as much as 12.4% (BIK, 2022, p. 11). What differenti-
ates bank customers taking out cash loans and customers of loan institu-
tions taking out non-bank loans is the scoring profile — in the case of banks
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
259
in the period between 2019 and October 2022, it was stable at 516–517
points, while for loans in the same period it increased from 458 points to
482 points (BIK, 2022, p. 22). Consequently, the quality of the portfolio of
cash loans is higher than that of non-bank loans (DPD 91+ for cash loans in
October 2022 was 11.1%, and 21.5% for non-bank loans). However, what is
noticeable is that the quality of cash loans remains stable — since 2022, the
overdue loan ratio has decreased by 1.7 percentage points, and the quality
of non-bank loans has significantly improved by 12.4 percentage points.
This proves the increasing professionalisation of the loan sector in terms of
loan risk management methods (BIK, 2022, p. 20). This process is confirmed
by the decreasing approval rate for non-bank loans from nearly 60% in the
first half of 2018 to over 30% in the first half of 2022 (ZPF 2023).
A study of LT sector enterprises shows that non-bank loan customers in
Poland tend to be people up to 59 years of age. Respondents indicated that
people over 60 do not take advantage of their services. All surveyed entities
indicated that the share of their customers aged 60+ is 0%. Among the rea-
sons, one may notice that such people are digitally excluded or do not trust
the online channel. Respondents indicate that the distribution of education
of clients is quite even.
It is not possible to point to one main factor that might cause LT debt,
but it is worth emphasising that customers also use LT loans to repay other
credit. LT loan-takers tend to be regularly customers. One should also note
that LT loan repayments generally run smoothly. This conclusion is also
confirmed by the results of our household survey. Nevertheless, under-25-
year-olds (12 out of 12 indications) as well as first-time LT customers (10
out of 12 indications) are the worst payers. The most common method used
to solve repayment arrears (10 out of 12 indications) is to offer a longer
repayment period, which results in lowering the monthly instalment.
LT companies are perceived by 68% of clients as modern institutions
and by 56.5% of clients as trustworthy. Their services are, according to 68%
of respondents, easier to access than banks, and convenient to use accord-
ing to 66.5%. According to only 38.5% of respondents, LT offers better fi-
nancial conditions than banks, while 33.5% disagree. According to the ma-
jority (53%), LT institutions are rather safe. A detailed summary is present-
ed in Fig. 1.
The perception of LT as offering more accessible services is also con-
firmed in the sense that the main determinant of customer use is better
service than banks, expressed as faster processing of loans (see Fig. 1). It
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
260
should be noted that only 22.5% of respondents resort to LT as an alterna-
tive after being rejected by a bank.
LT competes on the loan market by offering fast, low-cost loans that are
easy to apply for, as well as relatively high amounts that can be borrowed
(see Fig. 2).
Black swans from the perspective of the LT market in Poland
The first black swan to be considered is the COVID-19 pandemic. Re-
strictions introduced and lockdown at a critical moment led to the digitisa-
tion of many markets and transferred demand to the Internet (Hadasik &
Kubiczek, 2022). Therefore, more people naturally began to use LT services.
Among the LT companies surveyed, only one tried to take advantage of the
opportunity by expanding their product range, while the rest did not seek
development opportunities, instead merely focusing on their current op-
erations — the number of products on offer did not change.
In addition, the restrictions introduced should not have affected the
demand up until that point, as LT institutions mainly focus on the online
channel. It should be noted that at the beginning of the COVID-19 pandem-
ic in Poland — April 2020 — the total number of non-bank loan applica-
tions dropped by as much as 63.8% compared to the previous year (BIK,
2020, p. 4). This was associated with society’s general restraint on the credit
and loan market — in the same period, the number of applications for cash
loans decreased by 44.4%, instalment loans by 30.9%, and mortgages by
25.3% (BIK, 2020, p. 4). However, representatives of the LT companies stud-
ied claim that, in general, the pandemic did not affect the demand for the
products they offer (9 out of 12 responses), and the legal solutions brought
in during the COVID-19 pandemic only significantly affected the opera-
tions of one entity surveyed. Other companies mainly changed the struc-
ture of their products — e.g., by reducing the emphasis on instalment loans
in the pandemic, because of their low profitability. Digital loans supple-
mented bank products, but during the COVID-19 pandemic, this was lim-
ited by anti-usury regulations coming into force that limited zero interest
costs of consumer credit, which had been applicable until June 2021. After
this period, the loan sector is observed to have developed rapidly. The
BNPL sector was spurred by the growth in e-commerce, especially in the
pandemic and post-pandemic period (Fig. 4).
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
261
In 2021–2022, the dynamics of non-bank loans and deferred payments
significantly exceeded the dynamics of bank loans in each category, which
presented stagnation (instalment loans) or even declines (credit cards) re-
placed by deferred payments (Table 2).
The financial situation of customers did not change. This is confirmed
by the lack of an observable shift in the number of bad debtors. Only LT
enterprises noted a deterioration in current loan repayments. After the
pandemic, interest in LT grew — only 3 out of 12 did not notice an increase
in interest. This is confirmed by BIK data (2021, p. 11), which show that the
demand for non-banking loans is growing. Since the outbreak of the pan-
demic, both the number and value of loans granted have been on the rise.
In October 2022, compared to the previous year, the number of loans grew
by as much as 26.4% and their value rose by 31.4%. It can, therefore, be
concluded that the rapid development of the non-bank loan market in Po-
land before the pandemic was put on hold during it, while the growth rate
returned after the most intense wave of the COVID-19 pandemic had
passed.
The second black swan to be considered is the outbreak of war in
Ukraine with its harmful impact on the market. The overlapping energy
crisis and the increasing rate of inflation caused surge in interest rates,
which according to more than half LT companies has affected their busi-
ness more than the COVID-19 pandemic.
According to LT entities, in the short term, further interest rate hikes
will have a positive impact on LT and BNPL sector growth (11 out of 12
responses). However, in the longer term, continued rising inflation and
soaring interest rates, as well as the related deterioration of the economic
situation on the LT market, will cause a shock throughout the non-bank
loan market in Poland. This is due to the expected worsening of customers’
living circumstances, which will result in a greater number of rejected ap-
plications (11 out of 12), as well as worse repayment of current debt, which
will result in a reduction in LT lending activity (12 out of 12) (Fig. 5).
LT companies have pointed out the ongoing work on the anti-usury act
finally passed by the Sejm on 6 October 2022, which tightened the maxi-
mum zero-interest cost of consumer credit (MPKK). According to them,
legislation will usher in more formalities (9 out of 12 responses), which will
make it harder for LT companies to lend money. So, investors will lose
interest in the non-bank loan market (12 out of 12 responses). The tighten-
ing of anti-usury regulations will result in more applications being rejected
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
262
by LT institutions (12 out of 12 responses). Consequently, the scale of fi-
nancial exclusion in Poland will increase (12 out of 12 indications). Pawn-
shops will become an alternative to borrowing money on the LT market (11
out of 12 responses) (Fig. 6).
Discussion
The study confirmed the main hypothesis and showed that LT products
(digital loans and BNPL) are complementary to bank loans in times of
shock (e.g. black swans) when banks limit their risk exposure, tighten their
lending policy leading to a reduction in the availability of bank credit. The
auxiliary hypotheses were also confirmed. During market stability, banks
and LT operate independently due to differences in the product (amount,
length of financing) and customer profile (borrower's age, average income,
risk level). The crisis affects consumer behaviour in such a way that despite
having access to loan products offered by banks after the crisis, they remain
LT customers.
Furthermore, the study has showed that the services of loan companies
are used by a relatively high percentage of people who are also customers
of banks. The above conclusion corresponds to the results of Tamara et al.
(2021), who recognised the COVID-19 pandemic as a factor that helped
boost the percentage of customers using both banks and loan companies in
the portfolios of each type of institutions. The pandemic accelerated the
shift online and thanks to this, the restrictions related to the pandemic did
not significantly affect the functioning of the market. This tendency is also
confirmed by Waliszewski (2020). The survey conducted among LT enter-
prises shows that, in the opinion of these companies, the increase in interest
rates caused by the war in Ukraine, the energy crisis and inflation will posi-
tively affect LT results in the short term, but in the long run more non-
performing loans can be expected. However, the predicted scenario may
not come true because, as demonstrated by Aldasoro et al. (2022), during
a crisis, loan companies tighten their lending policies more than banks.
Our research has also shown that a significant percentage of LT custom-
ers are people who have been refused financing by banks, which also
proves the complementarity of banks and loan companies. This conclusion
is in line with those formulated by di Maggio et al. (2022) and Branzoli and
Supino (2020). The Polish loan company and bank market is characterised
by low concentration (compared to highly developed countries) and the
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
263
complementarity of both types of institutions shown in the article confirms
the conclusions offered by Hodul (2022). An argument for complementarity
is also the fact that, considering the populations of LT customers and bank
customers, the financial standing of the former group is worse, and LT
customers are more indebted than those who only use banking services.
This observation is confirmed by de Roure et al. (2019) and di Maggio and
Yao (2021). However, it should not be concluded from the above that LT
enterprises do not use creditworthiness assessment tools and do not reject
loan applications. However, their acceptance criteria are different than
what banks require, which is one of the reasons for the far-reaching divide
between clients of both types of institutions (Ikigai Innovation Initiative,
2021).
LT clients are relatively young, and for the youngest group of clients,
taking out a loan for the first time, the quality of the portfolio is the lowest.
The above conclusion is consistent with the findings of Jakubowska-
Branicka et al. (2020), who see a disproportion between the share of young
customers in the portfolios of loan companies and banks (banks are less
willing to lend to young people).
We also prove that the LT sector competes with banks in terms of speed
of decision-making and friendly procedures and applications. At this level,
one might mention the substitutability and compliance of the obtained
results with the findings of Jagtiani and Lemieux (2018), who conclude that
a convenient form of obtaining financing causes interest in non-bank loans
from people who could just as easily borrow from a bank. The low level of
LT market regulation is an element of its competitive advantage, which is
gradually eroding along with the introduction of new requirements for
loan companies, which is also confirmed by and Nguyen et al. (2021). FTs
and LTs are more likely to use or develop automation tools such as busi-
ness analytics software, chatbots, customer relationship management soft-
ware, and to make use of cloud computing systems (Kutzbach & Pobach,
2022). What remains discussable for the conclusions formulated are the
impact of macroeconomic circumstances, the difficulty in predicting the
long-term consequences of macroeconomic and regulatory changes on the
LendTech sector. Undoubtedly, the Covid-19 pandemic outbreak has had
a positive effect on the market for digital lending platforms and the
LendTech market is growing as a result of shifting customer expectations
and behaviour owing to the numerous advantages provided by the digital-
isation of banking and financial services (LendTech Market Research,
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
264
2021). Perceived usefulness, perceived ease of use, and perceived security
influence are positively associated with the adoption of digital lending
(Yadav & Shanmugam, 2024). This result allows us to conclude that the
interest in LendTech’s offerings was not just incidental, created by a specif-
ic social and economic situation, but will become a permanent feature of
the global consumer finance market. A prospective direction of LT devel-
opment in the future will be the use of algorithms, data science (DS), artifi-
cial intelligence (AI) and machine learning (ML), which will constitute an
interesting areas of research (Cao et al., 2021).
Our research of households — LT users may be limited by the sample
size (200 respondents) due to the cost of the CAWI research. In the future,
a research could be conducted on a larger sample of LT users. Limitations
also include the geographical scope of the research. Focusing on the Polish
market may not reflect global trends in the financial sector. Nevertheless,
this limitation also represents an opportunity and sets directions for desir-
able research covering other regions of the world, for, as the literature re-
view shows, there are very few analyses devoted to this topic to date.
It may also be extremely important to examine the broader background
of consumers' motives when choosing an entity financing their consump-
tion needs. What is the impact of behavioural factors and cognitive errors
on the fact that customers with creditworthiness in the banking sector de-
cide to take out often more expensive and short-term consumer loans from
NBFI’s. The phenomena we are talking about have an international dimen-
sion. Similar observations were made by the CFPB in the USA in 2012,
when analysing the loan market immediately after the subprime crisis,
paying attention to the effects of limiting access to consumer bank loans
and the resulting growth of the LT market (CFPB, 2012).
Conclusions
The study of the LT sector and its clients positively verified the research
hypotheses — both main and auxiliary — and conclusions may be drawn
from the analysis of how black swans have impacted the LT and BNPL loan
sector in crisis situations and in long periods of market equilibrium.
In the Consumer Finance sector, during long periods of stabilisation,
products offered by lending institutions are offered independently of bank
loans and are mostly chosen by a different target group of borrowers. Their
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
265
scale of operations often remains marginal compared to the banks' loan
portfolio. Compared to banks, NBFI focuses on financing consumers with
lower creditworthiness, borrowing smaller amounts and for a shorter peri-
od, as well as those for whom quick decisions and maximum simplification
of credit procedures determine the choice of a credit institution.
In crisis situations, the phenomenon of complementarity between LT
and banks emerges, because the decline in the supply of bank loans is sup-
plemented with non-bank products. A survey addressed to the heads of
bank credit committees shows that during crisis periods, including the
Covid-19 pandemic and the war in Ukraine, banks tightened the criteria for
granting loans, limiting the appetite for credit risk (NBP 2023). The lack of
necessity to comply with the prudential recommendations of banking su-
pervision and a greater appetite for risk mean that even significant market
shocks do not significantly affect LT's business models and lending criteria,
ensuring consumers constant access to financing.
Experience from the analysis of the last two black swan events indicates
the importance of the lending sector for the consumer credit market. The
conclusions from this study have important practical implications for both
lending companies and banks. The LT offer has a significant social and
macroeconomic impact on the negative effects of market shocks. Weaker
borrowers can still access financing without generating increased risk in
the banking sector. Due to the limited scale of LT's operations and the tem-
porary nature of crisis situations, there is no phenomenon of substitution in
the consumer credit market. In the long erm banks remain the main finan-
ciers of households' financial needs, and non-bank financial institutions
focus on operations in their market niche.
The study shows market segments in which the above-mentioned insti-
tutions complement each other in crisis situations. It should be remem-
bered that as many as 71% of LT customers have debts in commercial
banks, which means — if potential borrowers have an acceptable financial
situation in both types of institutions and that their products are similar.
The study in question therefore indicates potential directions for the devel-
opment of products and services and areas in which we can expect LT's
actions aimed at a more sustainable market share — gaining procedural
and technological competitive advantages. In crisis situations, non-bank
financial institutions can effectively replace banking services, ensuring
continuous availability of financing to a wide range of consumers. There-
fore, awareness of the important social function that lending companies can
Equilibrium. Quarterly Journal of Economics and Economic Policy, 19(1), 241–278
266
perform justifies reflection on the pace and justification for further tighten-
ing of the state's regulatory policy in this area.
The loan sector caters particularly well to low-value loans for people
with a worse financial standing and those who expect simplified loan pro-
cedures. LT prevails online, which is their main distribution channel, and
banks offline.
The research results presented in this article are of a pioneering nature,
so they can be used for comparisons carried out on this topic — the re-
search has given rise to threads for further analysis and exploration, which,
due to the objective set, go beyond the immediate scope of this article's
considerations, but can certainly be continued by other researchers. The
specifics of digital services are by no means limited by territory, but have
a global dimension and should be explored by other researchers. It will be
interesting and justified to continue research on how the lending sector,
including LT, can help eliminate the effects of financial exclusion in the
event of weakening consumers' creditworthiness or changes in the market
situation resulting in a reduction in the supply of loans — e.g. as a result of
an increase in interest rates and in the period of materialisation of market
risk factors, such as the above-mentioned black swans.
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Acknowledgments
The authors of the article would like to thank the LT Foundation and PZIP for their
help in conducting an empirical study among LT and BNPL market entities.
The publication was financed as part of the Inter-University Research Grant SGH-
UEW-UEK-UEP-UEKat entitled LT sector and the phenomenon of credit exclusion in the
era of sustainable finance – dependencies, consequences, recommendations implemented in
the years 2022-2024.
Manager: prof. Krzysztof Waliszewski
Financed by the Minister of Science under the “Regional Initiative for Excellence”
programme.
The journal is co-financed in the years 2022–2024 by the Ministry of Education and
Science of the Republic of Poland in the framework of the ministerial programme
“Development of Scientific Journals” (RCN) on the basis of contract no.
RCN/SN/0129/2021/1concluded on 29 September 2022 and being in force until 28
September 2024.
Annex
Table 1. Socio-demographic factors of the surveyed population in the LT client
division (w %)
Variable Client (n=200)
Women 47.5
Men 52.5
Age – 18-24 17.5
Age – 25-34 35.5
Age – 35-44 26
Age – 45-54 12.5
Age – 55-64 5.5
Age – 65 + 3.0
Education – secondary 5.5
Education – vocational 9
Education – high school 45
Education – university 40.5
Income per person – up to 2000 PLN 17.5
Income per person – 2001-4000 PLN 48.5
Income per person – 4001-6000 PLN 24
Income per person – over 6000 PLN 9.5
Income per person – no info given 0.5
Number of people in the household – 1 4.5
Number of people in the household – 2 14
Number of people in the household – 3 36.5
Number of people in the household – 4 29.5
Number of people in the household – 5 and more 15.5
Table 2. Sales dynamics of bank loans, non-bank loans and BNPL y/y (in %)
Category of financing 2020 2021 2022
Cash loans -30.0% 29.1% -2.6%
Instalment loans 0.8% 21.4% -0.3%
Credit cards -48.5% 5.7% -4.5%
Non-bank loans -33.0% 56.2% 27.0%
Digital lending -17,7% 49,7% 26,2%
BNPL nd 29.9% 67.5%
Source: own elaboration based on BIK data, PayPo data, Provident data.
Figure 1. Value of granted bank loans, non-bank loans and deferred payments in
PLN billion (2019–2022, 2023 forecast)
Source: own elaboration based on BIK data, PayPo data, Provident data.
0.0
20.0
40.0
60.0
80.0
2019 2020 2021 2022 2023F
Cash loans Instalment loans Credit cards Non-bank loans Digital lending BNPL
Figure 2. Customer perception of LT and their services
Figure 3. Main reasons for using LT
0% 25% 50% 75% 100%
they are safe
they are trustworthy
they are modern
the offer is easier to access than banks
the use is convenient
better financial conditions than banks
I strongly disagree I do not agree
I rather disagree I don't agree either. I don't agree
I rather agree I agree
I definetly agree
0% 13% 25% 38% 50%
I use their offer because it was
recommended to me by friends and
family
I use their offer because they offer better
conditions than banks
I use them because in banks I meet with
refusals to grant a loan
I use their offer because they have better
service than banks (I can make a
commitment faster)
Figure 4. Brand recognition of individual LT enterprises on the Polish non-bank loan market
0%
25%
50%
75%
100%
Provident
Wonga.pl
Vivus.pl (Soonly Finance)
Everest Finanse (Bocian Pożyczki)
SMART pożyczka
Smartney
Loan Me
Happi pożyczki (IPF Polska)
Profi Credit
Kuki.pl
Pożyczkaplus.pl
Creamfinance Poland (LendOn.pl, Retino.pl,…
Banknot.pl
Zaplo (pożyczki ratalne)
Net Credit (inCredit)
Ferratum (Ferratum Money, Ekspres Kasa,…
ViaSMS.pl
Wandoo
Primus Finance (minipożyczka, alegotówka,…
Alfakredyt
Grupa Aventus (Marka Niewielka Pożyczka,…
Miloan
Minicredit
Asa lekkie raty
Oney
AxiCard
Creditstar
Finbo
TAK To Finanse
Capital Service
Rapida
MediRaty.pl
Flexee
Cashalot.pl
Paytree
Oros.pl
Wenance
AIQLABS
AvaFin
I heard I didn't heard
Figure 5. Assessment of the truthfulness of the statement “Inflation and rising
interest rates will make it go up”
Figure 6. Influence of tighter criteria and new regulations on loan market
0 3 6 9 12
scale of credit exclusion in banks
the percentage of rejected applications for a non-
bank loan
interest in loans from pawnshops
percentage of unpaid non-bank loans
demand for non-bank loans
interest in buy now pay later (BNPL)
Strongly disagree Disagree Slightly disagree
Neither agree nor disagree Slightly agree Agree
0 3 6 9 12
the scale of exclusion on the loan market will
increase
the interest of investors financing lending
activities will decrease
the percentage of rejected non-bank loan
applications will increase
loan companies will limit their lending
activities
interest in loans from pawnshops will increase
loan companies will offer deferred payments
(BNPL)
loan companies will extend the average
duration of the loan
Strongly disagree Disagree Slightly disagree
Neither agree nor disagree Slightly agree Agree
Strongly agree
