Privacy laws meant to protect you can accidentally block marginalized people from getting bank accounts for years.
March 19, 2026
Original Paper
When Privacy Protects but Excludes: The Costs and Benefits of Privacy Regulation in Credit Markets
SSRN · 6435099
The Takeaway
When a major Indian lender lost access to smartphone data due to new privacy rules, they couldn't 'see' the creditworthiness of borrowers without bank histories. Instead of protecting these users, the rule caused a massive credit contraction that prevented marginalized applicants from getting any formal loans for the next four years.
From the abstract
This paper studies the consequences of privacy regulation by exploiting Google’s 2019 restriction on CDR access for a major Indian FinTech lender. We show that this intervention reflects a key policy trade-off in digital credit markets: strengthened privacy protections raise loan applications, consistent with higher demand, yet simultaneously induce tighter screening, reflecting an overall contraction in credit supply. This credit contraction disproportionately excludes economically and socially