The evolution of financial technology and its impact on credit lending
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Keywords
Peer-to-peer lending ; Marketplace lending ; United States ; FinTech ; Economic freedom ; Loan default ; mortgages ; FHA ; Lolan-to-value caps ; SDGsAbstract
The rise of peer-to-peer (P2P) lending presents a significant challenge to traditional banking systems globally, offering an alternative channel for accessing financial services. This thesis investigates various aspects of P2P lending within the United States, exploring its expansion, impact on financial inclusion within the mortgage market, and defaults rates.
The research questions guiding this study include the factors driving P2P lending expansion, the influence of P2P lending on Federal Housing Administration (FHA) mortgage loans, and the determinants of default in the P2P lending industry.
The innovation of this study lies in three key aspects: firstly, the introduction of the Economic Freedom Index and its sub-indices to explain the development of P2P lending; secondly, the exploration of P2P lending dynamics in circumventing mortgage supply constraints by providing loans to marginal borrowers, thereby promoting financial inclusion and sustainability; and thirdly, the incorporation of specific macroeconomic indicators to explain defaults in P2P lending.
The empirical study is mainly based on hand-collected data from LendingClub, the largest online lender in the U.S. and worldwide, spanning from 2007 until 2020. Panel data techniques and logistic regression models were employed for analysis.
The empirical findings reveal that P2P lending activities are influenced by economic freedom levels, market concentration, and demographic factors, underscoring the role of institutional variables in shaping the credit market landscape. Moreover, P2P lending serves as an alternative source of financing for marginal borrowers, facilitating access to mortgage loans and promoting financial inclusion. The analysis also demonstrates a causal relationship between P2P lending and an increase in FHA loan volume, highlighting its positive impact on mortgage financing accessibility. Furthermore, the introduction of macroeconomic indicators enhances the predictive accuracy of default models in the P2P lending industry, with higher levels of economic indicators associated with lower delinquency rates.
The implications of these findings are significant for policymakers, investors, and financial regulators. Policymakers are urged to consider measures that enhance economic freedom, promote financial inclusion, and implement regulatory frameworks to mitigate risks associated with P2P lending. Investors can benefit from a better understanding of borrowers' creditworthiness and loan performance, while authorities can utilize forecasting models to address credit risk and prevent adverse effects on the economy. Overall, this thesis offers valuable insights into the complex dynamics of P2P lending, with implications for shaping policies aimed at fostering economic growth, financial stability, and sustainable development.
Department
Σχολή Οικονομικών, Επιχειρηματικών και Διεθνών Σπουδών. Τμήμα Οικονομικής ΕπιστήμηςNumber of pages
124Language
EnglishCollections
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Αναφορά Δημιουργού-Μη Εμπορική Χρήση-Όχι Παράγωγα Έργα 3.0 Ελλάδα
Αναφορά Δημιουργού-Μη Εμπορική Χρήση-Όχι Παράγωγα Έργα 3.0 Ελλάδα