After you have studied Economics in the News on pp. 624–625, answer the following questions.

a. What is fintech, when did it begin, and how has it grown?

b. In the market for personal loans, does fintech mainly change the demand for loanable funds or the supply of loanable funds? Draw a graph to illustrate your answer.

c. In the market for personal loans, how does fintech change interest rates and the quantities of loanable funds demanded and supplied?

Draw a graph to illustrate your answer.

d. Explain why personal loans from traditional financial institutions have not grown as quickly as those from fintech companies.

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A fintech company is a firm that provides Internet-based financial services and customized apps, which automate transactions. You use fintech when you make a payment with your smartphone or Venmo a friend. When fintech started it was used only by the big banks and other financial institutions to deliver improved cus- tomer service. Today, in a rapidly expanding world of new businesses that deliver a wide range of financial services, the tradi- tional institutions' share of the loanable funds market is shrinking. Figure 1 shows the market share of traditional financial in- stitutions, measured by their percentage of total financial assets, from 2000 to 2018. Of the many financial services provided by fintech com- panies, unsecured personal loans have seen spectacular growth. Financial institutions' assets (percentage of total financial assets) 49 Fintech 48. begins 46 45 $ 43 2005 Traditional financial institutions share shrinks Global financial crisis 2000 Year Figure 1 Financial Institutions' Share of Loanable Funds 2010 2015 2020