eInvoicing reshapes credit markets, uneven effects on borrowers
A new Banco de España working paper documents how electronic invoicing (eInvoicing) reshapes credit markets, leading to credit reallocation and changes in lending costs. The study finds uneven effects across firms, depending on their reliance on invoice-based financing.
Digital invoices, shifting credit
The research documents three main insights into the effects of eInvoicing on credit markets.
First, credit reallocates significantly towards firms already utilizing invoice-based credit, while non-invoice firms experience a contraction.
Second, the cost of credit falls for invoice firms and rises for non-invoice firms, consistent with a supply-driven mechanism where lenders' information sets are altered.
Third, banks' information production changes: eInvoicing widens the dispersion of rates and risk assessments for invoice firms, improving predictive accuracy, but reduces dispersion and worsens accuracy for non-invoice firms.
These findings suggest eInvoicing fundamentally reconfigures credit market outcomes, with heterogeneous impacts across different borrower types.
The study exploits a regional eInvoicing mandate in Spain's Basque Country and administrative credit data to provide these insights.
Basque Country's digital experiment
The analysis leverages the introduction of TicketBAI, a mandatory eInvoicing framework rolled out in Spain's Basque Country from 2021, while neighboring regions remained unaffected.
This unique policy change, combined with exhaustive administrative credit data from the Bank of Spain (CIR and CBI), allows for a difference-in-differences design.
The CIR provides monthly loan-level information, including origination, type, interest rate, and banks' internal estimates of borrower risk.
The sample covers January 2021 to December 2024, focusing on micro, small, and medium enterprises in Álava and Biscay, with Burgos, La Rioja, Cantabria, and Navarre serving as control provinces.
This granular data enables the study to observe loan-level information and firms' balance sheets.
Digitalization's double edge
The study critically highlights that technological advancements like eInvoicing do not uniformly benefit all market participants, creating a clear divide between 'invoice' and 'non-invoice' firms.
This uneven impact underscores the importance of policy considerations for firms less able to leverage digital infrastructure, potentially exacerbating existing inequalities in credit access.
For regulators, the findings suggest a need to monitor such digital divides to ensure financial inclusion and stability across the broader economy.