Emergence of Financial Intermediaries in Electronic Markets: The Case of Online P2P Lending

By Sven C. Berger, Fabian Gleisner. 2009

256 citations recorded by the source corpus.

We analyze the role of intermediaries in electronic markets using detailed data of more than 14,000 originated loans on an electronic P2P (peer-to-peer) lending platform. In such an electronic credit market, lenders bid to supply a private loan. Screening of potential borrowers and the monitoring of loan repayment can be delegated to designated group leaders. We find that these market participants act as financial intermediaries and significantly improve borrowers’ credit conditions by reducing information asymmetries, predominantly for borrowers with less attractive risk characteristics. Our findings may be surprising given the replacement of a bank by an electronic marketplace.

Subfields: Economics and Econometrics, Finance, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/20ae07d58be82953d20cd9321194406fa8157394

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Citations in the corpus

Instance-based credit risk assessment for investment decisions in P2P lending (2016, methodology): “P2P lending has been introduced as a new e-commerce phenomenon in the financial field for its potential to provide more economical efficiencies, as supported by an Internet-based information system (Wang et al., 2009; Berger & Gleisner, 2009).”
The state of the art of innovation-driven business models in the financial services industry (2010, background): “5 % and 1% of the payments received [46].”
Evaluating borrower’s default risk in peer-to-peer lending: evidence from a lending platform in China (2017, background): “…by an Internet-based platform, P2P lending has been introduced as a new e-commerce phenomenon in the financial field; it has great potential to provide more economical efficiencies (Berger and Gleisner 2009; Wang, Greiner, and Aronson 2009; Bachmann et al. 2011; Milne and Parboteeah 2016).”
Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending (2015, unknown): “In particular, Berger and Gleisner (2009) find that group leader screening of a pool of”
Determinants of Default in P2P Lending (2015, background): “Bachmann et al. [12] and Berger and Gleisner [6] review the history of P2P.”
Risk assessment in social lending via random forests (2015, background): “In addition, if a group leader recommends a loan listing put together by one of the group members, this endorsement increases the chance of the loan being issued and also decreases the final interest rate (Berger & Gleisner, 2009).”
Digital Finance and FinTech: current research and future research directions (2017, unknown): “Berger and Gleisner (2009) found that group leaders can lower borrowers’ cost of credit by signaling quality through pledging money to the borrower of the group.”