Bridging the credit gap: The influence of regional bank structure on the expansion of peer-to-peer lending

Nourhan Eid, Junhong Yang and Meryem Duygun

The British Accounting Review, 2024, vol. 56, issue 6

Abstract: This paper investigates the extent to which the regional credit market structures, characterized by the presence and lending capacity of traditional banks, shape the growth of online lending marketplaces using peer-to-peer (P2P) lending data. Using an instrumental variables (IV) approach, our study suggests that areas underserved by traditional banks witness more significant growth in P2P lending. This impact is more pronounced in regions with a lower presence of small bank outreach. Furthermore, we find that an increase in P2P lending is associated with a reduced risk of borrower default. Our findings also show that the expansion of online lending marketplaces positively impacts borrowers’ financial well-being by improving their credit scores.

Keywords: Peer-to-peer lending; Access to finance; Regional banking; Financial inclusion; Financial well-being (search for similar items in EconPapers)
JEL-codes: D40 G20 G21 G23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924002129

DOI: 10.1016/j.bar.2024.101448

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