This paper studies P2P lending and the factors explaining loan default. This is an important issue because in P2P lending individual investors bear the credit risk, instead of financial institutions, which are experts in dealing with this risk. P2P lenders suffer a severe problem of information asymmetry, because they are at a disadvantage facing the borrower. For this reason, P2P lending sites...

This paper examines the bank lending channel, which considers how monetary authority actions affect the variation of loans. We focus on the BRICS (Brazil, Russia, India, China and South Africa) totalizing 1254 banks from five countries in the period 2000-2012 (totalizing 13 years). The empirical results show that the effect of money supply growth on the growth of loans is non-linear and inverte...

Over the past decade, there has been a significant increase in the phenomenon known as ”predatory lending.” In a forthcoming paper, we argue that predatory lending emerged when market incentives that historically led lenders to engage in credit rationing gave way to a market where lenders could easily exploit unsophisticated borrowers. Our specific focus is on the home loan market, i.e., closed...

The statements, findings, conclusions, and recommendations found in this study are those of the authors and do not necessarily reflect the views of the Office of Advocacy, the United States Small Business Administration, or the United States Government. Executive Summa ry This research examines the implications to the amount of credit available to small businesses from the rapid and pervasive c...

This article examines the unequal distribution of credit and credit subsidies in the Brazilian agricultural sector from 1969 to 1990. Total credit subsidies exceeded US$ 40 billion in this period. The distribution across crops is studied econometrically. After controlling for area, the crops that benefited most had superior access to credit institutions, were tradeable, had high prices, and wer...

“Zombie lending” remains a widespread practice by banks around the world. In this paper, we exploit series of large-scale on-site inspections made on credit portfolios several Portuguese to investigate how these affect banks’ future lending decisions. We find that an inspected bank becomes 20% less likely refinance zombie firms, immediately spurring their default. Overall, seemingly reduce beca...

We analyze the transmission effects of monetary policy in a general equilibrium model of the financial sector, with bank lending and securities markets. Bank lending is constrained by capital adequacy requirements, and asymmetric information adds a cost to outside bank equity capital. In our model, monetary policy does not affect bank lending through changes in bank liquidity; rather, it operat...

We use a model of mean-shifting investment technologies to study the relationship between market structure, risk taking and social welfare in lending markets. Introduction of loan market competition is shown to reduce lending rates and to generate higher investments without increasing the equilibrium bankruptcy risk of borrowers. Hence, there need not be a tradeo€ between lending market competi...

Investigators exammning problems with credit availability during the most recent recession have been unable to provide definitive evidence that the decline in bank loans was, at least in part, a supply phenomenon. Furthermore, they have not focused on the subset of loans made to borrowers most likely to be dependent on bank financing. This study overcomes these flaws. By examining formal regula...