Intermediate Effects on Loan Rates from the Transition to a Partner Financing Model: Evidence from a Triple Differences Estimation

Abstract

In September 2023, Russia launched an experiment in partner financing. To participate, entities must undergo an approval process by the Bank of Russia. Once approved, they are permitted to offer financial services based on the principles of partner (sharing of risks and profits).

Six months before the official start of the experiment, the authors of this study began collecting data on the interest rates that banks offered to individuals on conventional loans. The resulting unique dataset includes monthly loan rates both prior to and throughout the first year following the experiment's launch. This enables an assessment of whether banks in the experiment changed the pricing of their conventional loan products after the introduction of partner financing – and if so, how and to what extent.

The central objective of the study is to determine whether the participating banks adopted a strategy of transfer pricing for products in the scope of the experiment. The analysis employs the triple differences (DDD) method, which simultaneously accounts for the effects of banks, regions, and time periods.

The findings offer valuable practical insights for the development of the partner financing market in Russia. They reveal how the banking sector responds to the implementation of innovative financial products and lay the groundwork for further research in this field.