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The Financial Intermediation Role of the P2P Lending Platforms

Author

Listed:
  • Olena Havrylchyk

    (University Paris 1 Panthéon-Sorbonne)

  • Marianne Verdier

    (University Paris 2 Panthéon Assas
    Ecole des Mines de Paris)

Abstract

The objective of our paper is to explore the role of P2P lending platforms through the prism of the theory of financial intermediation. P2P lending platforms perform the brokerage function of financial intermediaries by matching lenders’ supply and borrowers’ demand of funding, according to the risk and the maturity of their needs. Unlike banks, P2P lending platforms do not create money and do not perform risk and maturity transformation. However, they can organize secondary markets to trade loan contracts before maturity and some P2P lending platforms aim at providing a fixed income to lenders. To ensure efficient and sustainable financial intermediation, P2P lending platforms need to ensure that they are not subject to principal-agent problems and that their incentives coincide with those of lenders. The possibility of orderly resolution of P2P lending platforms failures might decrease moral hazard problems that are inherent in the modern financial intermediation.

Suggested Citation

  • Olena Havrylchyk & Marianne Verdier, 2018. "The Financial Intermediation Role of the P2P Lending Platforms," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 115-130, March.
    • Handle: RePEc:pal:compes:v:60:y:2018:i:1:d:10.1057_s41294-017-0045-1
    DOI: 10.1057/s41294-017-0045-1
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    Cited by:

    1. Thomas Hellmann & Ilona Mostipan & Nir Vulkan, 2019. "Be Careful What You Ask For: Fundraising Strategies in Equity Crowdfunding," NBER Working Papers 26275, National Bureau of Economic Research, Inc.
    2. Olena Havrylchyk & Aref Mahdavi-Ardekani, 2020. "Real effects of lending-based crowdfunding platforms on the SMEs," Post-Print halshs-02994903, HAL.
    3. Sirong Luo & Radha Mookerjee & Dengpan Liu, 2021. "The Effects of Auction‐based Pricing Mechanisms and Social Characteristics on Microloan Performance," Production and Operations Management, Production and Operations Management Society, vol. 30(2), pages 311-329, February.
    4. Olena Havrylchyk, 2018. "Regulatory framework for the loan-based crowdfunding platforms," OECD Economics Department Working Papers 1513, OECD Publishing.
    5. Mukhamad Najib & Wita Juwita Ermawati & Farah Fahma & Endri Endri & Dwi Suhartanto, 2021. "FinTech in the Small Food Business and Its Relation with Open Innovation," JOItmC, MDPI, vol. 7(1), pages 1-17, March.
    6. Nadia Nahar Purkayastha & Şule Erdem Tuzlukaya, 2020. "Determination Of The Benefits And Risks Of Peer-To-Peer (P2p) Lending: A Social Network Teory Approach," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(3), pages 131-143.
    7. Arif Perdana & Pearpilai Jutasompakorn & Sunghun Chung, 2023. "Shaping crowdlending investors’ trust: Technological, social, and economic exchange perspectives," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-17, December.
    8. Xueru Chen & Xiaoji Hu & Shenglin Ben, 2021. "How do reputation, structure design and FinTech ecosystem affect the net cash inflow of P2P lending platforms? Evidence from China," Electronic Commerce Research, Springer, vol. 21(4), pages 1055-1082, December.
    9. Galit Klein & Zeev Shtudiner & Moti Zwilling, 2023. "Why do peer-to-peer (P2P) lending platforms fail? The gap between P2P lenders' preferences and the platforms’ intentions," Electronic Commerce Research, Springer, vol. 23(2), pages 709-738, June.
    10. Aleksy Klimowicz & Krzysztof Spirzewski, 2021. "Concept of peer-to-peer lending and application of machine learning in credit scoring," Working Papers 2021-04, Faculty of Economic Sciences, University of Warsaw.
    11. Dömötör, Barbara & Ölvedi, Tímea, 2021. "A személyközi hitelezés létjogosultsága a pénzügyi közvetítésben [The relevance of peer-to-peer lending in financial intermediation]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 773-793.
    12. Yinghui Chen & Xiaolin Gong & Chien-Chi Chu & Yang Cao, 2018. "Access to the Internet and Access to Finance: Theory and Evidence," Sustainability, MDPI, vol. 10(7), pages 1-38, July.

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    More about this item

    Keywords

    Peer-to-peer lending; Online lenders; Market structure; Access to finance; Financial crisis; Internet; Information and communication technologies;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G01 - Financial Economics - - General - - - Financial Crises
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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