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.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20899

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
Iyer, Khwaja, Luttmer, and Shue w15242 Screening Peers Softly: Inferring the Quality of Small Borrowers
Martin and Ventura w19960 Managing Credit Bubbles
Agrawal, Catalini, and Goldfarb w19133 Some Simple Economics of Crowdfunding
Agrawal, Catalini, and Goldfarb w16820 The Geography of Crowdfunding
NBER Videos

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

Contact Us