The Role of Online Peer-to-Peer Lending in Crisis Response: Evidence from Kiva

Abstract

Online peer-to-peer (P2P) lending, a new form of microfinance, has been touted as to its prominent potential for reducing world poverty. Although a growing body of research has been devoted to examining online P2P lending, how such platforms actually make a difference in curbing poverty has yet to be fully explored. The Ebola outbreak of 2014 provides us a unique empirical opportunity to explore such broader impacts of online P2P lending. We investigate how the demand and supply sides of P2P lending platforms react to an unpredictable crisis. Employing a difference-in-difference identification strategy with data from Kiva.org, we conduct country- and loan-level estimations. Results show upward trends on both demand and supply sides of P2P lending; borrowers request more financial capital and lenders are more active in their lending behaviors in the post-crisis period. We extend online P2P lending literature by investigating the influences of “off-platform shocks on within-platform behaviors