Banking competition and the use of shadow credit: Evidence from lending marketplaces

Qianli  Ma; Lei  Xu; Sajid Anwar; Zenghua  Lu

doi:10.1016/j.gfj.2023.100884

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Banking competition and the use of shadow credit: Evidence from lending marketplaces

Journal article

Open access

Peer reviewed

Banking competition and the use of shadow credit: Evidence from lending marketplaces

Qianli Ma, Lei Xu, Sajid Anwar and Zenghua Lu

Global Finance Journal, Vol.58, pp.1-24

2023

DOI: https://doi.org/10.1016/j.gfj.2023.100884

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Abstract

Banking competition

Financial inclusion

Marketplace lending

Shadow banking

Borrowers' interagency migration

The purpose of this study is to determine whether banking competition can affect the creditworthiness of borrowers relying on shadow credit. Upon analyzing the granular data from a leading online lending marketplace in China, we discover that marketplace borrowers from concentrated banking markets are generally more creditworthy than those from competitive banking markets. This phenomenon is more pronounced when new banks contribute to competition in the banking market and when borrowers are young or new to the marketplace. These findings suggest that borrowers may migrate from banks to lending marketplaces when the banking market is concentrated and that banking competition can improve the financial inclusion of individuals and households through relaxed credit checks.

Details

Title: Banking competition and the use of shadow credit: Evidence from lending marketplaces
Authors: Qianli Ma (Author) - University of South Australia
Lei Xu (Corresponding Author) - University of South Australia
Sajid Anwar (Author) - University of the Sunshine Coast, Queensland, School of Business and Creative Industries
Zenghua Lu (Author) - University of South Australia
Publication details: Global Finance Journal, Vol.58, pp.1-24
Publisher: Elsevier BV
Date published: 2023
DOI: 10.1016/j.gfj.2023.100884
ISSN: 1873-5665; 1044-0283
Copyright note: This article is available under the Creative Commons CC-BY-NC-ND license and permits non-commercial use of the work as published, without adaptation or alteration provided the work is fully attributed.
Organisation Unit: School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland
Language: English
Record Identifier: 99743698402621
Output Type: Journal article

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Collaboration types: Domestic collaboration
Web Of Science research areas: Business, Finance

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