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

Posted: 11 Dec 2015

See all articles by Adair Morse

Adair Morse

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: December 2015

Abstract

Can peer-to-peer lending (P2P) disintermediate and mitigate information frictions in lending so 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 may be able to capture rents associated with the removal of a layer of 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. Thus, P2P may be able to offer pricing and/or access benefits to potential borrowers. Early research suggests that the future of consumer lending will involve more big data and reintermediation of underwriting by all types of financial institutions. I ask many more questions than current research can answer, hoping to motivate future research.

Suggested Citation

Morse, Adair, Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending (December 2015). Annual Review of Financial Economics, Vol. 7, pp. 463-482, 2015. Available at SSRN: https://ssrn.com/abstract=2702345 or http://dx.doi.org/10.1146/annurev-financial-111914-041939

Adair Morse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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