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P2P lenders versus banks: Cream skimming or bottom fishing?

Calebe de Roure, Loriana Pelizzon () and Anjan V. Thakor

No 206, SAFE Working Paper Series from Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt

Abstract: We derive three testable predictions from a bank-P2P lender model of competition: (i) P2P lending grows when some banks are faced with exogenously higher regulatory costs, (ii) P2P loans are riskier than bank loans; and (iii) the risk-adjusted interest rates on P2P-loans are lower than those on bank loans. We confront these predictions with data on P2P loans and the consumer bank credit market in Germany and find empirical support. Overall, our analysis indicates the P2P lenders are bottom fishing, especially when regulatory shocks create a competitive disadvantage for some banks. Keywords: P2P lending, bank lending, competition

JEL-codes: G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-ure
Date: 2019
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