Citation

Discussion Paper Details

Please find the details for DP14740 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding

Author(s): Fabio Braggion, Alberto Manconi, Nicola Pavanini and Haikun Zhu

Publication Date: May 2020

Keyword(s): Chinese financial system, Marketplace credit and structural estimation

Programme Area(s): Financial Economics and Industrial Organization

Abstract: We study the welfare effects of the transition of online debt crowdfunding from the older "peer-to-peer" model to the "marketplace" model, where the crowdfunding platform sells diversified loan portfolios to investor. We develop an equilibrium model of debt crowdfunding capturing platform design (peer-to-peer or marketplace) and lender preferences over loan and portfolio product characteristics, and we estimate it on a novel database on credit at a large online platform based in China. Moving from the peer-to-peer to the marketplace model raises lender surplus, platform profits, and credit provision. At the same time, reducing lender exposure to liquidity risk can be beneficial. A counterfactual scenario where the platform resembles a bank by bearing liquidity risk has similar welfare properties as the marketplace model when liquidity is high, but results in larger lender surplus and credit provision, and only moderately lower platform profits, when liquidity is low.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14740

Bibliographic Reference

Braggion, F, Manconi, A, Pavanini, N and Zhu, H. 2020. 'The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14740