The Financial Intermediation Role of the P2P Lending Platforms

Olena Havrylchyk and Marianne Verdier ()
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Marianne Verdier: CRED - Centre de Recherche en Economie et Droit - UP2 - Université Panthéon-Assas, CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: The objective of our paper is to explore the role of P2P lending platforms through the prism of the theory of financial intermediation. P2P lending platforms perform the brokerage function of financial intermediaries by matching lenders' supply and borrowers' demand of funding, according to the risk and the maturity of their needs. Unlike banks, P2P lending platforms do not create money and do not perform risk and maturity transformation. However, they can organize secondary markets to trade loan contracts before maturity and some P2P lending platforms aim at providing a fixed income to lenders. To ensure efficient and sustainable financial intermediation, P2P lending platforms need to ensure that they are not subject to principal-agent problems and that their incentives coincide with those of lenders. The possibility of orderly resolution of P2P lending platforms failures might decrease moral hazard problems that are inherent in the modern financial intermediation.

Keywords: Peer-to-peer lending; Online lenders; Market structure; Access to finance; Financial crisis; Internet; Information and communication technologies (search for similar items in EconPapers)
Date: 2018-03
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Published in Comparative Economic Studies, 2018, 60 (1), pp.115-130. ⟨10.1057/s41294-017-0045-1⟩

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Journal Article: The Financial Intermediation Role of the P2P Lending Platforms (2018)
Working Paper: The Financial Intermediation Role of the P2P Lending Platforms (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-03201914

DOI: 10.1057/s41294-017-0045-1

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