Addressing information asymmetries in online peer-to-peer lending

Mark Cummins, Theo Lynn, Ciaran Mac an Bhaird, Pierangelo Rosati

Research output: Chapter in Book/Report/Conference proceedingChapter

8 Citations (Scopus)
2 Downloads (Pure)

Abstract

Digital technologies are transforming how small businesses access finance and from whom. This chapter explores online peer-to-peer (P2P) lending, a form of crowdfunding that connects borrowers and lenders. Information asymmetry is a key issue in online peer-to-peer lending marketplaces that can result in moral hazard or adverse selection, and ultimately impact the viability and success of individual platforms. Both online P2P lending platforms and lenders seek to minimise the impact of information asymmetries through a variety of mechanisms. This chapter discusses the structure of online P2P lending platforms and reviews how the disclosure of hard and soft information, and herding can reduce information asymmetries. The chapter concludes with a discussion of further avenues for research.
Original languageEnglish
Title of host publicationDisrupting Finance
Subtitle of host publicationFintech and Strategy in the 21st Century
EditorsTheo Lynn, John G Mooney, Pierangelo Rosati, Mark Cummins
Place of PublicationCham, Switzerland
Chapter2
Pages15-32
Number of pages18
ISBN (Electronic)9783030023300
DOIs
Publication statusPublished - 7 Dec 2018

Keywords

  • peer to peer lending
  • information asymmetry
  • finance

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