Digital Wagers, Physical Pillars: Essays on Fintech, Banking and Small Businesses
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Hu, Yue
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Abstract
This dissertation examines two distinct yet interconnected dimensions of the financial market, focusing on how emerging technologies and traditional structures shape investor behavior and business outcomes.
In the first chapter, we proxy retail investor attention through Google Trends and find that fungible and non-fungible crypto tokens generate greater attention from high–gambling propensity regions. Crypto attention is higher during bubble-like episodes in the crypto market and for more lottery-like tokens. Moreover, retail crypto attention decreases after sports gambling is legalized. Higher token attention is associated with more contributors and higher fundraising. However, consumer credit default rates spike after periods of high crypto attention, but solely in the subprime segment. Overall, our findings suggest that gambling preferences strongly predict retail investor interest in the crypto market.
In the second chapter, we examine how the physical presence of bank branches influences local small business performance. Using a novel dataset of merchant-level transactions, we exploit branch closures induced by bank mergers as an exogenous shock to local banking access. We find that losing local branches leads to significant declines in small business sales, fewer new entries, and higher exit rates; these adverse effects coincide with a reduction in local small business lending. The impact is especially pronounced for the smallest and most remote merchants, particularly in the retail and dining sectors. Areas with better internet connectivity experience milder effects, suggesting that digital banking and fintech services partly substitute for local branches. Notably, the decline in new business formation diminishes as branch networks recover, while the losses in sales and the increases in exits persist for longer. Our findings shed light on the significance of physical bank presence in gathering soft information and alleviating local small business lending friction.
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2025-08-25
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Dissertation (PhD)