TY - JOUR
T1 - The Role of Marketplace Lending in Credit Markets
T2 - Evidence from Bank Mergers
AU - Avramidis, Panagiotis
AU - Mylonopoulos, Nikolaos
AU - Pennacchi, George G.
N1 - The authors are grateful for valuable comments from two anonymous referees, editor Tomasz Piskorski, Isaac Hacamo, Aziz Alimov, and participants of the 2019 City University of Hong Kong Finance Conference, the 2019 Conference on Research on Economic Theory and Econometrics, and the 2019 Michigan State University Federal Credit Union Conference on Financial Institutions and Investments.
PY - 2022/4
Y1 - 2022/4
N2 - We develop a model of competition between banks and a marketplace lender to motivate empirical tests using local market data on U.S. banks and the largest marketplace lending platform. Employing mergers of large, multimarket banks as an exogenous credit supply shock, we find that marketplace lending absorbs unmet demand for consumer credit following a decline in the availability of bank credit. Merger-induced bank branch closings lead to an increase in marketplace loan requests and loan acceptance rates, particularly for debt consolidation loans to lower-risk consumers. We also find that marketplace lending mitigates credit distress in local economies affected by mergers.
AB - We develop a model of competition between banks and a marketplace lender to motivate empirical tests using local market data on U.S. banks and the largest marketplace lending platform. Employing mergers of large, multimarket banks as an exogenous credit supply shock, we find that marketplace lending absorbs unmet demand for consumer credit following a decline in the availability of bank credit. Merger-induced bank branch closings lead to an increase in marketplace loan requests and loan acceptance rates, particularly for debt consolidation loans to lower-risk consumers. We also find that marketplace lending mitigates credit distress in local economies affected by mergers.
KW - bank mergers
KW - community credit stress
KW - consumer credit
KW - marketplace lending
UR - http://www.scopus.com/inward/record.url?scp=85132910758&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85132910758&partnerID=8YFLogxK
U2 - 10.1287/mnsc.2021.3996
DO - 10.1287/mnsc.2021.3996
M3 - Article
AN - SCOPUS:85132910758
SN - 0025-1909
VL - 68
SP - 3090
EP - 3111
JO - Management Science
JF - Management Science
IS - 4
ER -