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The Impact of COVID-19 on Demand and Lending Behavior in Prosocial P2P Lending

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  • Christopher Priberny

Abstract

I derive two innovative metrics, capturing the demand and the excess demand for prosocial P2P loans in the US. The measures are based on a data set comprising prosocial P2P loan applications obtained from the US P2P lending platform Kiva for the period of November 2011 to December 2022. Furthermore, I analyze how both indices are influenced by the COVID-19 pandemic. Interestingly, the measures for the current pandemic development show a negative impact on demand while the COVID-19 reproduction rate shows a positive relation, indicating a pro-active behavior of borrowers. On the other side, socially motivated lenders seem to be less generous in providing interest-free loans in times of a worsening pandemic. As it turns out, the risk-free interest level positively impacts demand and excess demand for prosocial lending on Kiva even though the loans were granted without any interest.

Suggested Citation

  • Christopher Priberny, 2023. "The Impact of COVID-19 on Demand and Lending Behavior in Prosocial P2P Lending," Credit and Capital Markets – Kredit und Kapital, Duncker & Humblot, Berlin, vol. 56(1), pages 5-26.
    • Handle: RePEc:dah:aeqccm:v56_y2023_i1_q1_p5-26
    DOI: 10.3790/ccm.56.1.5
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    Keywords

    KIVA; prosocial P2P lending; demand; lending behavior; COVID-19;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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