Addressing information asymmetries in online peer-to-peer lending

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

doi:10.1007/978-3-030-02330-0_2

Addressing information asymmetries in online peer-to-peer lending

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

Accounting And Finance

Research output: Chapter in Book/Report/Conference proceeding › Chapter

10 Citations (Scopus)

9 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 language	English
Title of host publication	Disrupting Finance
Subtitle of host publication	Fintech and Strategy in the 21st Century
Editors	Theo Lynn, John G Mooney, Pierangelo Rosati, Mark Cummins
Place of Publication	Cham, Switzerland
Chapter	2
Pages	15-32
Number of pages	18
ISBN (Electronic)	9783030023300
DOIs	https://doi.org/10.1007/978-3-030-02330-0_2
Publication status	Published - 7 Dec 2018

Keywords

peer to peer lending
information asymmetry
finance

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10.1007/978-3-030-02330-0_2Licence: CC BY-NC-ND 4.0

Cummins-etal-Palgrave-2018-Addressing-information-asymetries-in-onlineFinal published version, 441 KBLicence: CC BY-NC-ND 4.0

Cite this

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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.",

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AB - 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.

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KW - information asymmetry

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Addressing information asymmetries in online peer-to-peer lending

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Keywords

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