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Peer-to-Peer Lending – A (Financial Stability) Risk Perspective

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  • Käfer Benjamin

    (Department of Economics, Universität Kassel, Nora-Platiel-Straße 4, Kassel, Germany)

Abstract

The aim of this survey article is to discuss P2P lending, a subcategory of crowdfunding, from a (financial stability) risk perspective. The discussion focuses on a number of dimensions such as the role of soft information, herding, platform default risk, liquidity risk, and the institutionalization of P2P markets. Overall, we conclude that P2P lending is more risky than traditional banking. However, it is important to recognize that a constant conclusion would be misleading. P2P platforms have evolved and changed their appearance markedly over time, which implies that although our final conclusion of increased riskiness through P2P markets remains valid over time, it is based on different arguments at different points in time.

Suggested Citation

  • Käfer Benjamin, 2018. "Peer-to-Peer Lending – A (Financial Stability) Risk Perspective," Review of Economics, De Gruyter, vol. 69(1), pages 1-25, April.
    • Handle: RePEc:lus:reveco:v:69:y:2018:i:1:p:1-25:n:2
    DOI: 10.1515/roe-2017-0020
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    References listed on IDEAS

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    9. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
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    Cited by:

    1. Philipp Kirchner, 2020. "On shadow banking and fiÂ…nancial frictions in DSGE modeling," MAGKS Papers on Economics 202019, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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