COVID-19 bust, policy response, and rebound: equity crowdfunding and P2P versus banks

Douglas Cumming, Andrea Martínez-Salgueiro, Robert S. Reardon () and Ahmed Sewaid ()
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Robert S. Reardon: Florida Atlantic University
Ahmed Sewaid: Insper Institute of Education and Research

The Journal of Technology Transfer, 2022, vol. 47, issue 6, No 9, 1825-1846

Abstract: Abstract Traditional intermediaries have the ability and the incentive to intertemporarily smooth outcomes. Fintechs, such as peer-to-peer (P2P) lending platforms and equity crowdfunding (ECF) platforms, enable riskier projects without regard to intertemporal smoothing. U.S. data from May 2016 to June 2020 show that COVID-19 had an adverse impact on bank consumer lending. However, counter to our expectations, ECF and P2P are much more stable, timely, and resilient in the COVID-19 crisis compared to bank consumer lending. Moreover, the data indicate that P2P lending is a leading indicator for bank consumer lending and that bank consumer lending substitutes ECF. The policy response—CARES Act—caused: (1) a significant increase in ECF volumes, (2) a substantial rebound to bank consumer lending, and iii) at best, neutralized an already-stabilized level of P2P lending.

Keywords: Equity Crowdfunding; P2P Lending; Fintech; COVID-19; Bank Consumer Lending (search for similar items in EconPapers)
JEL-codes: G21 G28 G51 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10961-021-09899-6

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