Financial Innovation and Borrowers: Evidence from Peer-to-Peer Lending

57 Pages Posted: 30 Jun 2016 Last revised: 9 May 2019

See all articles by Tetyana Balyuk

Tetyana Balyuk

Emory University - Goizueta Business School

Date Written: May 6, 2019


The impact of technology-enabled (FinTech) lenders on bank credit is theoretically ambiguous. Banks can reduce credit if borrowing from FinTech lenders increases default risk. Alternatively, banks can provide more credit if such borrowing signals creditworthiness. I examine these possibilities using a unique setting of a large peer-to-peer lender. I find that banks increase credit for consumers who obtain peer-to-peer loans, especially consumers with inferior credit histories. Most borrowers use peer-to-peer loans to refinance expensive bank debt. Marginally funded borrowers consume these loans, but their bank credit increases nonetheless. These results are consistent with information spillovers from peer-to-peer lending to banking.

Keywords: access to credit, banking, consumer finance, FinTech, P2P lending

JEL Classification: G21, G23, D14, D45, D82

Suggested Citation

Balyuk, Tetyana, Financial Innovation and Borrowers: Evidence from Peer-to-Peer Lending (May 6, 2019). Rotman School of Management Working Paper No. 2802220, Available at SSRN: or

Tetyana Balyuk (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

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