The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding

46 Pages Posted: 20 May 2020

See all articles by Fabio Braggion

Fabio Braggion

Tilburg University - Tilburg University School of Economics and Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Alberto Manconi

Bocconi University - Department of Finance; Centre for Economic Policy Research (CEPR)

Nicola Pavanini

Tilburg University; Tilburg University - Tilburg University School of Economics and Management; CEPR IO Programme

Haikun Zhu

Erasmus University Rotterdam

Multiple version iconThere are 2 versions of this paper

Date Written: May 2020

Abstract

We study the welfare effects of the transition of online debt crowdfunding from the older "peer-to-peer" model to the "marketplace" model, where the crowdfunding platform sells diversified loan portfolios to investor. We develop an equilibrium model of debt crowdfunding capturing platform design (peer-to-peer or marketplace) and lender preferences over loan and portfolio product characteristics, and we estimate it on a novel database on credit at a large online platform based in China. Moving from the peer-to-peer to the marketplace model raises lender surplus, platform profits, and credit provision. At the same time, reducing lender exposure to liquidity risk can be beneficial. A counterfactual scenario where the platform resembles a bank by bearing liquidity risk has similar welfare properties as the marketplace model when liquidity is high, but results in larger lender surplus and credit provision, and only moderately lower platform profits, when liquidity is low.

Keywords: Chinese financial system, Marketplace credit, structural estimation

JEL Classification: D14, D61, G21, G51, L21

Suggested Citation

Braggion, Fabio and Manconi, Alberto and Pavanini, Nicola and Zhu, Haikun, The Value of "New" and "Old" Intermediation in Online Debt Crowdfunding (May 2020). CEPR Discussion Paper No. DP14740, Available at SSRN: https://ssrn.com/abstract=3603972

Fabio Braggion (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Alberto Manconi

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/albertomanconi/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Nicola Pavanini

Tilburg University ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://https://sites.google.com/site/nicolapavanini/

Tilburg University - Tilburg University School of Economics and Management ( email )

PO Box 90153
Tilburg, 5000 LE Ti
Netherlands

CEPR IO Programme ( email )

London
United Kingdom

Haikun Zhu

Erasmus University Rotterdam ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

HOME PAGE: http://https://sites.google.com/site/zhuhaikun2018/home

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