Marketplace Lending and Consumer Credit Outcomes: Evidence from Prosper
67 Pages Posted: 8 Apr 2019
Date Written: 2019-04-02
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: Suggested Citation