The Performance of Marketplace Lenders

Center for Financial Studies Working Paper No. 706, 2023

55 Pages Posted: 12 Sep 2018 Last revised: 28 Feb 2023

See all articles by Roman Kräussl

Roman Kräussl

Bayes Business School (formerly Cass); Hoover Institution, Stanford University

Zsofia Kräussl

Department of Finance, University of Luxembourg

Joshua Matthew Pollet

University of Illinois at Urbana-Champaign - Department of Finance

Kalle Rinne

Universite du Luxembourg - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 20, 2022

Abstract

We analyze the performance of marketplace lending using loan cash flow data from the largest platform, Lending Club. We find substantial risk-adjusted performance of about 40 basis points per month for the entire loan portfolio. Other loan portfolios grouped by risk category have similar risk-adjusted performance. We show that characteristics of the local bank sector for each loan, such as concentration of deposits and the presence of national banks, are related to the performance of loans. Thus, marketplace lending has the potential to finance a growing share of the consumer credit market in the absence of a competitive response from the traditional incumbents.

Keywords: Marketplace lending, household finance, financial intermediation, financial innovation, competition

JEL Classification: G12, G21

Suggested Citation

Kraeussl, Roman and Kräussl, Zsofia and Pollet, Joshua Matthew and Rinne, Kalle, The Performance of Marketplace Lenders (May 20, 2022). Center for Financial Studies Working Paper No. 706, 2023, Available at SSRN: https://ssrn.com/abstract=3240020 or http://dx.doi.org/10.2139/ssrn.3240020

Roman Kraeussl (Contact Author)

Bayes Business School (formerly Cass) ( email )

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

Zsofia Kräussl

Department of Finance, University of Luxembourg ( email )

6, rue Richard Coudenhove-Kalergi
Luxembourg, L-1359
Luxembourg

Joshua Matthew Pollet

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
(217) 344-4311 (Phone)

Kalle Rinne

Universite du Luxembourg - Department of Finance ( email )

L-1511 Luxembourg
Luxembourg

HOME PAGE: http://https://sites.google.com/view/kallerinne/home

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