I use unique datasets from peer-to-peer lending platforms and a platform entry event to study competition among financial intermediaries. Under competition, the risk-adjusted interest rate decreases for safe borrowers but increases for risky borrowers, and the incumbent platform becomes less prudent in borrower screening, and the corresponding loan performance is aggravated. Competition distort...

This paper exploits a natural experiment to document adverse selection among prime consumer credit borrowers in the US. In our setting, some borrowers are offered only a short term loan while an observationally equivalent set of borrowers is offered the same short term loan as well as an additional long maturity option. We isolate adverse selection from the causal effect of maturity on repaymen...

This paper studies the impact of bank mergers on firm-bank lending relationships using information from individual loan contracts in Belgium. We analyse the effects of bank mergers on the probability of borrowers maintaining their lending relationships and on their ability to continue tapping bank credit. The Belgian financial environment reflects a number of interesting features: high banking ...

Many believe that a key innovation by the Grameen Bank is to encourage borrowers to help each other in hard times. To analyse this, we study a mechanism design problem where borrowers share information about each other, but their limited side contracting ability prevents them from writing complete insurance contracts. We derive a lending mechanism which efficiently induces mutual insurance. It ...

We study a financial market economy with a continuum of borrowers and pooling of borrowers’ promises. Under these conditions and in the absence of designing costs, utility-maximizing decisions of price-taking borrowersmay lead to financial market incompleteness. Parametrizing equilibria through the borrowers’ no-arbitrage beliefs, we link expectations to the financial market structure. Markets ...

I address the following issue in this paper: how does information sharing among banks about borrowers affect banks’ competition, and ultimately, the interest rate borrowers pay for the loan they take? One would expect that full information sharing among banks reduces lenders’ risk and results in lower lending rates than any other arrangement. This may be the reason why regulators of the banking...

In peer-to-peer (P2P) lending, soft information, such as borrowers’ facial features, textual descriptions of loan applications and so on, are regarded as potential signals to screen borrowers. In this study, we examine the signaling effect of a new category of soft informationsocial media information. Leveraging a unique dataset that combines loan data from a large P2P lending company with soci...