Why do retail consumers look for P2P financial intermediation? Are internet-based peer-to-peer (P2P) loans a substitute for or a complement to bank loans? de Roure et al. (2016) answer these questions by comparing P2P lending with the nonconstruction consumer credit market in Germany. The study shows that P2P lending is servicing a slice of the consumer credit market neglected by banks, namely highrisk and small-sized loans. Nevertheless, when accounting for the risk differential, interest rates are very similar. The main finding is that P2P lending is substituting the banking sector for high-risk consumer loans since banks are unwilling or unable to supply this slice of the market. This study serves to show where the institutionalization of credit provision has left a slice of the market unsupplied.
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