Marketplace Lending and Consumer Credit Outcomes: Evidence from Prosper

67 Pages Posted: 8 Apr 2019

See all articles by Timothy Dore

Timothy Dore

Board of Governors of the Federal Reserve System

Traci Mach

Board of Governors of the Federal Reserve System

Date Written: 2019-04-02

Abstract

In 2005, Prosper launched the first peer-to-peer lending website in the US, allowing for consumers to apply for and receive loans entirely online. To understand the effect of this new credit source, we match application-level data from Prosper to credit bureau data. Post application, borrowers' credit scores increase and their credit card utilization rates fall relative to non-borrowers in the short run. In the longer run, total debt levels for borrowers are higher that of non-borrowers. Differences in mortgage debt are particularly large and increasing over time. Despite increased debt levels relative to non-borrowers, delinquency rates for borrowers are significantly lower.

Keywords: Marketplace lending, Online lending, Peer-to-peer lending, Prosper marketplace, Disintermediation

JEL Classification: G23, G29, G20

Suggested Citation

Dore, Timothy and Mach, Traci, Marketplace Lending and Consumer Credit Outcomes: Evidence from Prosper (2019-04-02). FEDS Working Paper No. 2019-022. Available at SSRN: https://ssrn.com/abstract=3367450 or http://dx.doi.org/10.17016/FEDS.2019.022

Timothy Dore (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Traci Mach

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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