Marketplace lending in the wake of disaster

52 Pages Posted: 12 Oct 2021 Last revised: 27 Mar 2024

See all articles by Daniel Bradley

Daniel Bradley

University of South Florida

Matthew Henriksson

University of Tennessee, Knoxville - Haslam College of Business

Sarath Valsalan

University of Mississippi - School of Business Administration

Date Written: March 1, 2024

Abstract

Using natural disasters as exogenous shocks to the peer-to-peer (P2P) loan market, we document a local increase in loan demand post-disaster, which is significantly elevated in low deposit areas. Interest rates and delinquencies from loans approved during this demand shock are similar to pre-event levels. Loans allocated prior to a disaster are more likely to default, but loans granted a hardship delay of payment accommodation exhibit a reduction in default probability, providing relief to borrowers and lower costs to investors. Overall, while regulators are concerned that P2P lending is predatory, our findings provide some positive benefits of this marketplace.

Keywords: Marketplace lending, natural disasters, P2P lending, personal loans, FinTech

JEL Classification: G2, G21, G23, G28, G29

Suggested Citation

Bradley, Daniel and Henriksson, Matthew and Valsalan, Sarath, Marketplace lending in the wake of disaster (March 1, 2024). Available at SSRN: https://ssrn.com/abstract=3940557 or http://dx.doi.org/10.2139/ssrn.3940557

Daniel Bradley

University of South Florida ( email )

Tampa, FL 33620
United States

Matthew Henriksson (Contact Author)

University of Tennessee, Knoxville - Haslam College of Business ( email )

453 Haslam Business Building
Knoxville, TN 37996-4140
United States

Sarath Valsalan

University of Mississippi - School of Business Administration ( email )

PO Box 3986
Oxford, MS 38677
United States

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