The Value of Financial Intermediation: Evidence from Online Debt Crowdfunding

Fabio Braggion, Alberto Manconi (), Nicola Pavanini and Haikun Zhu

No 14740, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Whereas many online marketplaces are fundamentally peer-to-peer, credit ones sell diversified loan portfolios characterized by maturity mismatch, a traditional feature of financial intermediation. To understand why, we develop a structural model of online debt crowdfunding and estimate it on a novel database from a large Chinese platform. Abandoning the peer-to-peer paradigm raises lender surplus, platform profits, and credit provision, but exposes investors to liquidity risk. A counterfactual where the platform resembles a bank by bearing liquidity risk generates larger lender surplus and credit provision when liquidity is low. More generally, our results shed light on how financial intermediation creates value.

Keywords: Marketplace credit; Chinese financial system; Structural estimation (search for similar items in EconPapers)
JEL-codes: D14 D61 G21 G51 L21 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-ban and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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