The Review of Corporate Finance Studies Vol. 11 No. 2 2022

P2P Lenders versus Banks: Cream Skimming or Bottom Fishing?

Calebe de Roure¹; Loriana Pelizzon²; Anjan V. Thakor³

¹ Frankfurt School of Finance & Management , Germany · ² Leibniz Institute for Financial Research SAFE, Goethe University Frankfurt, Ca’ Foscari University of Venice, and CEPR, Germany · ³ Olin School of Business, Washington University in St. Louis, USA

Abstract

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

DOI

10.1093/rcfs/cfab026

Volume

11

Issue

2

Pages

213-262

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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