NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending

Adair Morse

NBER Working Paper No. 20899
Issued in January 2015
NBER Program(s):Corporate Finance

Can peer-to-peer lending (P2P) crowdfunding disintermediate and mitigate information frictions in lending such that choices and outcomes for at least some borrowers and investors are improved? I offer a framing of issues and survey the nascent literature on P2P. On the investor side, P2P disintermediates an asset class of consumer loans, and investors seem to capture some rents associated with the removal of the cost of that financial intermediation. Risk and portfolio choice questions linger prior to any inference. On the borrower side, evidence suggests that proximate knowledge (direct or inferred) unearths soft information, and by implication, P2P should be able to offer pricing and/or access benefits to potential borrowers. However, social connections require costly certification (skin in the game) to inform credit risk. Early research suggests an ever-increasing scope for use of Big Data and incentivized re-intermediation of underwriting. I ask many more questions than current research can answer, hoping to motivate future research.

download in pdf format
   (376 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20899

Published: Adair Morse, 2015. "Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending," Annual Review of Financial Economics, vol 7(1), pages 463-482.

Users who downloaded this paper also downloaded* these:
Freedman and Jin w19820 The Information Value of Online Social Networks: Lessons from Peer-to-Peer Lending
Martin and Ventura w19960 Managing Credit Bubbles
Agrawal, Catalini, and Goldfarb w19133 Some Simple Economics of Crowdfunding
Iyer, Khwaja, Luttmer, and Shue w15242 Screening Peers Softly: Inferring the Quality of Small Borrowers
Agrawal, Catalini, and Goldfarb w16820 The Geography of Crowdfunding
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us