Peer-to-Peer Lenders Versus Banks: Substitutes or Complements?

By Huan Tang. The Review of financial studies, 2019

527 citations recorded by the source corpus.

This paper studies whether, in the consumer credit market, peer-to-peer (P2P) lending platforms serve as substitutes for banks or instead as complements. I develop a conceptual framework and derive testable predictions to distinguish between these two possibilities. Using a regulatory change as an exogenous shock to bank credit supply, I find that P2P lending is a substitute for bank lending in terms of serving infra-marginal bank borrowers yet complements bank lending with respect to small loans. These results indicate that the credit expansion resulting from P2P lending likely occurs only among borrowers who already have access to bank credit.Received June 1, 2017; editorial decision September 15, 2018 by Editor Andrew Karolyi. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Subfields: Economics and Econometrics, Finance, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/0e11ff41524369f2c39a3ce0c8bc9f4324777259

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Citations in the corpus

To FinTech and Beyond (2019, unknown): “Four papers, by Fuster et al. (2019), Tang (2019), Vallee and Zeng (2019), and D’Acunto, Prabhala, and Rossi (2019), offer related perspectives on this market disruption.”
Fintech and banking: What do we know? (2019, unknown): “From the Tang (2019) and de Roure et al. (2019) papers, the main takeaways are as follows: 43 • P2P lenders compete with bank lending, but tend to have a competitive advantage when banks experience some kind of shock that (temporarily) limits their credit supply.”
Fintech Credit Markets Around the World: Size, Drivers and Policy Issues (2018, background): “In the United States, platforms engaging in credit origination can be subject to licensing requirements in each state where they operate.”
Fintech Borrowers: Lax Screening or Cream-Skimming? (2020, background): “…i.e., unsecured personal loans (see, among others, Liao et al. 2017; Danisewicz and Elard, 2018; De Roure, Pelizzon and Thakor, 2018; Balyuk, 2019).7 The most related studies are Tang (2019) and Chava, Paradkar and Zhang (2019), which analyze the interaction between traditional and fintech lenders.”