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The performance of marketplace lenders

Author

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  • Kräussl, Roman
  • Kräussl, Zsofia
  • Pollet, Joshua
  • Rinne, Kalle

Abstract

We analyze the performance of marketplace lending using loan cash flow data from the largest platform, Lending Club. We find substantial risk-adjusted performance of about 35 basis points per month for the entire loan portfolio. Other loan portfolios grouped by risk category have similar risk-adjusted performance. We show that characteristics of the local bank sector for each loan, such as concentration of deposits and the presence of national banks, are related to the performance of loans. We conclude that marketplace lending has the potential to finance a growing share of the consumer credit market in the absence of a competitive response from the traditional incumbents.

Suggested Citation

  • Kräussl, Roman & Kräussl, Zsofia & Pollet, Joshua & Rinne, Kalle, 2024. "The performance of marketplace lenders," Journal of Banking & Finance, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:jbfina:v:162:y:2024:i:c:s037842662400044x
    DOI: 10.1016/j.jbankfin.2024.107124
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    Keywords

    Marketplace lending; Household finance; Financial intermediation; Financial innovation; Competition;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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