Can Technology Undermine Macroprudential Regulation? Evidence from Peer-to Peer Lending in China
|Speaker:||Alberto Manconi, Bocconi|
|Date:||Tuesday 23 January 2018|
|Location:||Pearson teaching room, Building: one|
We study whether, and to what extent, peer-to-peer (P2P) credit creates a channel to circumvent a key macroprudential tool, loan-to-value (LTV) caps. Using a novel, hand-collected database including detailed information on all lending transactions at RenrenDai, a leading Chinese P2P credit platform, we exploit a policy intervention in the market for real estate mortgages in a number of major Chinese cities, which increases the demand for P2P credit. We analyze P2P lending outcomes around the policy intervention, comparing affected and un-affected cities in a difference-in-differences setting. Our test provides clean empirical evidence on the capacity of P2P credit to undermine LTV caps. More broadly, our analysis informs the ongoing debate on macroprudential regulation, as well as on FinTech and the regulatory challenges posed by the disintermediation of financial services.