A collective decision-making model of p2p lending platforms compared to bank lending
Abstract
Purpose
This study aims to develop a theoretical model that uses the decision-making theory in a financial intermediation setting to provide insights into the differences between the outcomes of the decision-making process for a bank and for a peer-to-peer (p2p) lending platform to explain the role of p2p lending versus bank lending in the credit market.
Design/methodology/approach
This study develops a novel approach to explaining the differences between p2p lending and bank lending by using the decision-making theory. In particular, it analyzes the likelihood of a risky borrower being able to obtain a loan from a p2p lending platform versus the likelihood of being able to obtain a loan from a bank. The results contribute a theoretical understanding of factors that can determine the role of p2p lending platforms versus that of banks in the credit market, with implications for recovery from an economic crisis.
Findings
p2p lending platforms have the potential for contributing to economic recovery when they are subject to less regulations and are able to offer a faster and less costly lending process than do banks and when they are used by a large number of lenders. However, the potential role of p2p lending platforms in recovery might be reduced when banks have access to anticyclical measures that reduce banks’ capital requirements or provide them with low-cost funds.
Originality/value
This study provides a novel approach to explaining the differences between p2p lending and bank lending by using the decision-making theory. The results contribute a theoretical understanding of factors that can determine the role of p2p lending platforms versus that of banks in the credit market.
Keywords
Acknowledgements
The authors thank the Editor and anonymous referees for very helpful comments.
Declarations of interest: None
Erratum: It has come to the attention of the publisher that the article, Ruth Ben-Yashar and Miriam Krausz “A collective decision-making model of p2p lending platforms compared to bank lending”, published in Studies in Economics and Finance, was published with incorrect affiliation information for Ruth Ben-Yashar. The correct affiliation is Department of Economics, Bar-Ilan University, Ramat Gan, Israel. The error was introduced in the editorial process and has now been corrected in the online version. The publisher sincerely apologises for this error and for any inconvenience caused.
Citation
Ben-Yashar, R. and Krausz, M. (2023), "A collective decision-making model of p2p lending platforms compared to bank lending", Studies in Economics and Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SEF-05-2023-0260
Publisher
:Emerald Publishing Limited
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