The Financial Intermediation Role of the P2p Lending Platforms

16 Pages Posted: 24 Apr 2018

See all articles by Olena Havrylchyk

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris; Université Paris Ouest - Nanterre, La Défense - EconomiX

Marianne Verdier

Université Paris 2 Panthéon Assas

Date Written: January 2018

Abstract

The objective of our paper is to explore the role of P2P lending platforms through the prism of the theory of financial intermediation. P2P lending platforms perform the brokerage function of financial intermediaries by matching lenders’ supply and borrowers’ demand of funding, according to the risk and the maturity of their needs. Unlike banks, P2P lending platforms do not create money and do not perform risk and maturity transformation. However, they can organize secondary markets to trade loan contracts before maturity and some P2P lending platforms aim at providing a fixed income to lenders. To ensure efficient and sustainable financial intermediation, P2P lending platforms need to ensure that they are not subject to principal-agent problems and that their incentives coincide with those of lenders. The possibility of orderly resolution of P2P lending platforms failures might decrease moral hazard problems that are inherent in the modern financial intermediation.

Keywords: Peer-to-peer lending, Online lenders, Market structure, Access to finance, Financial crisis, Internet, Information and communication technologies

Suggested Citation

Havrylchyk, Olena and Verdier, Marianne, The Financial Intermediation Role of the P2p Lending Platforms (January 2018). Comparative Economic Studies, Vol. 60, Issue 1, 2018. Available at SSRN: https://ssrn.com/abstract=3162044 or http://dx.doi.org/10.1057/s41294-017-0045-1

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris ( email )

113 rue de Grenelle
Paris, F-75007
France

Université Paris Ouest - Nanterre, La Défense - EconomiX ( email )

200 Avenue de la République
Nanterre cedex, Nanterre Cedex 92000
France

Marianne Verdier (Contact Author)

Université Paris 2 Panthéon Assas ( email )

France

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