Abstract

The COVID-19 pandemic created widespread economic distress, prompting swift government intervention through the CARES Act of 2020 and the American Rescue Plan (ARP) Act of 2021. These measures provided stimulus payments, enhanced unemployment benefits, eviction moratoria, and support for businesses, offering a financial lifeline to millions of Americans (U.S. Department of the Treasury, 2020; The White House, 2021). Early evidence suggests that these timely fiscal policies prevented severe financial collapse and demonstrated the critical role of government in safeguarding economic stability during crises (Coibion et al., 2020; Cajner et al., 2020). Alongside direct government support, financial services—and particularly emerging FinTech solutions—have become increasingly important in mitigating household financial vulnerabilities. Yet despite the promise of financial services in reducing poverty, an estimated 1.7 billion adults remain excluded from the formal financial system (Demirgüç-Kunt et al., 2018). Advances in internet and information technology have accelerated the rise of financial technology (FinTech), which offers new pathways for improving financial inclusion (Philippon, 2016). Services such as peer-to-peer (P2P) lending expand access to credit and redistribute opportunities to underserved populations. Research on FinTech’s impact on financial accessibility, however, remains divided—some studies highlight its benefits (Berg et al., 2020), while others emphasize persistent risks and regulatory concerns (Buchak et al., 2018). In the United States, P2P lending platforms like Prosper illustrate both the promise and the controversy. Valued at $67.9 billion in 2019 and projected to exceed $550 billion by 2027 (Claessens et al., 2018), the P2P lending market is growing rapidly. Advocates argue that these platforms democratize finance, while critics point to regulatory arbitrage and inequalities (Buchak et al., 2018). At the same time, the rise of cryptocurrencies—enabled by blockchain technology—adds another dimension to the FinTech landscape. Cryptocurrencies provide decentralized, secure, and anonymous transactions (Babich & Hilary, 2019). While some view them as advancing financial inclusion and reshaping access to finance (Schar, 2021), their interaction with P2P lending and broader financial accessibility remains underexplored. This lack of clarity highlights a critical gap in the literature. To date, few studies have investigated the dynamic interplay between different FinTech services—particularly P2P lending and cryptocurrencies—and the moderating role of government policy. Understanding how policies like the CARES Act or ARP Act influence behaviors in these markets is essential, as both P2P lending and cryptocurrency investment involve risk-taking behaviors that may be amplified or restrained by fiscal interventions. This study addresses that gap by examining how government policy shapes the interaction between P2P lending and cryptocurrency markets. Findings suggest that as policies were enacted over time, risk-taking behavior in these markets intensified, revealing unintended behavioral consequences of policy interventions. The empirical analysis shows that when individuals received stimulus payments through three rounds of government policy, borrowing behavior in peer-to-peer (P2P) lending platforms evolved. In the first round, people did not increase their borrowing. However, in the second and third rounds, borrowing activity grew progressively as more payments were distributed. Furthermore, while changes in the cryptocurrency market capitalization did not influence borrowing during the first and second rounds of stimulus, the third round revealed a different pattern, which means that as market capitalization increased, individuals borrowed more through P2P lending platforms. This study contributes to three research areas. First, the study extends the FinTech literature by analyzing how different services jointly affect financial accessibility and wealth distribution. Second, it advances the literature on government policy by exploring its behavioral effects in FinTech markets, moving beyond traditional macroeconomic outcomes. Third, it provides practical insights into the design of balanced policies that support innovation and inclusion while recognizing potential risks. By linking government intervention, P2P lending, and cryptocurrency markets, this research offers a more holistic understanding of financial inclusion in the digital age.

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