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

BuR Business Research Journal, Vol. 2, No. 1, May 2009

27 Pages Posted: 14 Mar 2010

See all articles by Sven C. Berger

Sven C. Berger

Fabian Gleisner

Goethe University Frankfurt - Faculty of Economics and Business Administration

Date Written: March, 11 2010

Abstract

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.

Keywords: asymmetric information, intermediation, social lending, electronic markets

Suggested Citation

Berger, Sven C. and Gleisner, Fabian, Emergence of Financial Intermediaries in Electronic Markets: The Case of Online P2P Lending (March, 11 2010). BuR Business Research Journal, Vol. 2, No. 1, May 2009. Available at SSRN: https://ssrn.com/abstract=1568679

Fabian Gleisner

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Department of Economics
Frankfurt am Main
Germany

No contact information is available for Sven C. Berger

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