Credit Supply and Demand, Monetary Policy and P2P Lending

Project Start:01/2019
Researchers:Michele Costola, Xu Liu, Steven Ongena, Loriana Pelizzon, Anjan Thakor, Calebe de Roure
Category: Household Finance, Systemic Risk Lab
Funded by:LOEWE

Over the past decade, there has been substantial growth in peer-to-peer (P2P) lending through digital platforms, which are marketplaces for loans where lenders and borrowers match directly, in the absence of an intermediating bank. Originally, P2P lending platforms were organized as online auctions. Over time, these platforms have evolved to take central stage in loan screening, evaluation, and pricing. Investors of P2P loans also regard the lending platform as an intermediary rather than as a passive match-maker, and outsource most credit adjudication tasks, such as loan evaluation and screening, to the platform’s algorithm (Balyuk and Davydenko, 2018). In contrast to traditional financial intermediaries, P2P platforms do not take deposits, perform liquidity transformation, or monitor loans after origination.

The project is divided in two main parts. The first is devoted to finalize and publish the current paper “P2P Lenders versus Banks: Cream Skimming or Bottom Fishing?. The second, and more important is devoted to study the P2P lending market using loan-level data from LendingClub, one of the largest P2P lending platforms in the US. The objective of the project is to i) examine the effect of monetary policy on the loan granting decisions made by P2P lenders; ii) examine the effect of monetary policy on the loan interest rates in the P2P lending market.

Related Published Papers

Author/sTitleYearProgram AreaKeywords
Andrea Bedin, Monica Billio, Michele Costola, Loriana PelizzonCredit Scoring in SME Asset-Backed Securities: An Italian Case Study. Journal of Risk and Financial Management
Journal of Risk and Financial Management
2019 Household Finance, Systemic Risk Lab credit scoring; probability of default; small and medium enterprises; asset-backed securities