Marketplace Lending of SMEs

Douglas J. Cumming and Lars Hornuf

No 8100, CESifo Working Paper Series from CESifo

Abstract: Peer-to-business lending refers to online platforms facilitating loans from individuals to smalland medium-sized enterprises (SMEs). We conjecture that easy-to-understand risk ratings conveyed by the platform play a pronounced role in influencing the borrowing success of SMEs and that more sophisticated financial information and adverse selection are largely absent in these markets. We introduce a dataset of 414 SME marketplace loans and 8,236 online loan days to test these propositions. The data examined provide strong support for the importance of simple platform ratings in influencing investor behavior, while the effect of more detailed financial information is less pronounced.

Keywords: debt crowdfunding; entrepreneurial finance; digital platforms (search for similar items in EconPapers)
JEL-codes: G21 G24 G32 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-pay and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8100

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