2008 April 7

Jours fixes take place on the first monday of the month, starting at 5:00 p.m., in room 220C of the university´s main building.

[Fabian Gleisner, E-Finance Lab]

On numerous traditional marketplaces intermediaries act as agents between supply and demand. The necessity of such intermediaries was questioned when electronic marketplaces emerged. We analyze the role of intermediaries on electronic markets using detailed data of more than 14,000 originated loans on an electronic P2P (person-to-person) lending platform.

On an electronic credit market lenders bid for supplying a loan. Screening of potential borrowers and the monitoring of loan repayment can be delegated to designated group leaders who run small communities within the marketplace. We find that there are participants on the electronic marketplace acting as financial intermediaries between borrowers and lenders and that these intermediation services significantly improve borrowersÂ’credit conditions. Our findings are robust to self-selection bias and characteristics of the financial transactions, and may be surprising given the long discussion on disintermediation due to electronic marketplaces. Traditional intermediation theory has significant explanatory power for the role of financial intermediaries on electronic lending platforms. Our research provides important empirical evidence for the existing theoretical contributions on electronic markets and disintermediation, and yields some interesting implications for the design of P2P lending platforms and the behaviour of its participants.