The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding
52 Pages Posted: 20 May 2020 Last revised: 27 May 2022
Date Written: May 2020
Whereas many online marketplaces are fundamentally peer-to-peer, credit ones sell diversified loan portfolios characterized by maturity mismatch, a traditional feature of financial intermediation. To understand why, we develop a structural model of online debt crowdfunding and estimate it on a novel database from a large Chinese platform. Abandoning the peer-to-peer paradigm raises lender surplus, platform profits, and credit provision, but exposes investors to liquidity risk. A counterfactual where the platform resembles a bank by bearing liquidity risk generates larger lender surplus and credit provision when liquidity is low. More generally, our results shed light on how financial intermediation creates value.
Keywords: Chinese financial system, Marketplace credit, structural estimation
JEL Classification: D14, D61, G21, G51, L21
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