The Impact of Peer-to-Peer Lending on Small Business Loans

40 Pages Posted: 14 May 2020

See all articles by Jin-Hyuk Kim

Jin-Hyuk Kim

University of Colorado at Boulder

Frank Stähler

University of Tuebingen - Department of Economics; University of Adelaide - School of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 2020

Abstract

We investigate the impact of peer-to-peer lending on the small business loans originated by US depository institutions that are subject to the Community Reinvestment Act. We present a model where a borrower can choose between a traditional bank and a crowdlending platform and show that the entry of crowdlending can induce a switching effect as well as a credit expansion effect. Using the staggered entry of LendingClub across states between 2009 and 2017, we find that the platform entry reduced the small business loans originated by banks, in particular, in the low- or moderate-income tracts as well as in the distressed middle-income tracts with a high poverty rate. A conservative estimate suggests that the crowdlending entry may have reduced the aggregate lending volume to small businesses.

Keywords: crowdfunding, marketplace lending, fintech, Community Reinvestment Act

JEL Classification: D260, G210, G280

Suggested Citation

Kim, Jin-Hyuk and Stähler, Frank, The Impact of Peer-to-Peer Lending on Small Business Loans (2020). CESifo Working Paper No. 8268, Available at SSRN: https://ssrn.com/abstract=3598753

Jin-Hyuk Kim (Contact Author)

University of Colorado at Boulder ( email )

Campus Box 256
Boulder, CO 80309
United States

Frank Stähler

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

HOME PAGE: http://www.frank-staehler.de

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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