Crossing the Next Frontier: The Role of ICT in Driving the Financialization of Credit

16 Pages Posted: 23 May 2018

See all articles by Daniel Drummer

Daniel Drummer

Harvard University

Stefan Feuerriegel

ETH Zürich

Dirk Neumann

University of Freiburg

Date Written: May 2017

Abstract

Financialization describes a phenomenon whereby financial markets assume an increasingly dominant role within the economy. This paper seeks to dissect the role of information and communications technology (ICT) in financialization by following a cross-disciplinary approach across finance, economics and information systems. Accordingly, we develop a general framework describing the relationship between ICT and financialization. This framework allows us to investigate the recent rise of online marketplaces for credit. Consequently, ICT is not only facilitating, but fundamentally driving a disintermediation of banks through advances in computing, communication and information technology. We also provide supporting evidence from interviews with almost 40 senior experts and C-level executives. Interestingly, only rather recent innovations have enabled the popularity of marketplace lending, such as cloud computing, big data, scalable IT infrastructures and comprehensive ecosystems of programming interfaces. In contrast, we observe a slow integration of advanced analytics in the field of risk management. Based on our analysis, the paper also discusses cross-country implications for marketplace lending, financialization and regulation.

Keywords: financialization, information technology, marketplace lending, peer-to-peer lending, credit, intermediation

Suggested Citation

Drummer, Daniel and Feuerriegel, Stefan and Neumann, Dirk, Crossing the Next Frontier: The Role of ICT in Driving the Financialization of Credit (May 2017). Journal of Information Technology, Vol. 32, Issue 3, 2017. Available at SSRN: https://ssrn.com/abstract=3183713 or http://dx.doi.org/10.1057/s41265-017-0035-9

Daniel Drummer (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Stefan Feuerriegel

ETH Zürich ( email )

Weinbergstr. 56/58
Zürich, 8092
Switzerland

HOME PAGE: http://www.mis.ethz.ch/

Dirk Neumann

University of Freiburg ( email )

Albert-Ludwigs-Universität Freiburg, Wirtscha.inf.
Kollegiengebäude II, Platz der Alten Synagoge
Freiburg im Breisgau, 79098
Germany

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