In a new paper, we investigate how initial public offerings affect peer-to-peer lending platforms and, more specifically, whether the platforms tend to alter their operational decisions in anticipation of going public.
Peer-to-peer lenders are essentially online services that match anonymous lenders with borrowers at a lower cost than traditional banking institutions do. Consequently, borrowers can pay lower interest rates, and lenders can potentially earn higher returns. Interest rates are usually set by an intermediary platform on the basis of the borrower’s creditworthiness (based on features such as credit score, employment status, annual income, debt-to-income ratio, and credit history). The intermediary … Read more