Big Data Pumps Money at 500 Million Chinese With No Bank CreditBy
Mining of internet, point-of-sale data leads to new borrowers
Credit without collateral adds to shadow-banking dangers
When Chinese liquor store owner Lu Ruibo saw a loan offer pop up on his mobile phone, it was far from the perfect deal: the annualized interest rate was more than 20 percent.
But Lu’s shop in Henan province was going through a cash squeeze and he needed money for family purchases like books and clothes, so he decided to borrow for the first time in his life.
Pre-approved based on criteria including his history of making payments through a mobile-phone application and the size of his online social network, Lu accepted a 500 yuan ($78), two-week loan. “In the past, if I was short of cash, I wouldn’t buy,” he later said…
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