Download This PaperThe Value of Financial Intermediation: Evidence from Online Debt Crowdfunding
52 Pages Posted: 14 Apr 2020 Last revised: 31 Oct 2024
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The Value of Financial Intermediation: Evidence from Online Debt Crowdfunding
The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding
Date Written: November 11, 2022
Abstract
Most online marketplaces are peer-to-peer. Credit ones, however, are not and they have resurrected many features of traditional financial intermediaries. To understand why, we use online credit as a laboratory to investigate the value of financial intermediation. We develop a structural model of online debt crowdfunding and estimate it on a novel database. We find that abandoning the peer-to-peer paradigm raises lender surplus, platform profits, and credit provision, but exposes investors to liquidity risk. A counterfactual where the platform resembles a bank by bearing liquidity risk can generate larger lender surplus and credit provision when liquidity is low and lenders are risk averse.
Keywords: Marketplace credit, Chinese financial system, Structural estimation
JEL Classification: D14, D61, G21, G51, L21
Suggested Citation: Suggested Citation
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