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COVID-19 bust, policy response, and rebound: equity crowdfunding and P2P versus banks

Author

Listed:
  • Douglas J. Cumming

    (Florida Atlantic University
    University of Birmingham, University House)

  • Andrea Martinez-Salgueiro

    (University of Santiago de Compostela, Avenida do Burgo)

  • Robert S. Reardon

    (Florida Atlantic University)

  • Ahmed Sewaid

    (Insper Institute of Education and Research)

Abstract

Traditional intermediaries have the ability and the incentive to intertemporarily smooth outcomes. Fintechs, such as peer-to-peer (P2P) lending platforms and equity crowdfunding (ECF) platforms, enable riskier projects without regard to intertemporal smoothing. U.S. data from May 2016 to June 2020 show that COVID-19 had an adverse impact on bank consumer lending. However, counter to our expectations, ECF and P2P are much more stable, timely, and resilient in the COVID-19 crisis compared to bank consumer lending. Moreover, the data indicate that P2P lending is a leading indicator for bank consumer lending and that bank consumer lending substitutes ECF. The policy response—CARES Act—caused: (1) a significant increase in ECF volumes, (2) a substantial rebound to bank consumer lending, and iii) at best, neutralized an already-stabilized level of P2P lending.

Suggested Citation

  • Douglas J. Cumming & Andrea Martinez-Salgueiro & Robert S. Reardon & Ahmed Sewaid, 2022. "COVID-19 bust, policy response, and rebound: equity crowdfunding and P2P versus banks," The Journal of Technology Transfer, Springer, vol. 47(6), pages 1825-1846, December.
    • Handle: RePEc:kap:jtecht:v:47:y:2022:i:6:d:10.1007_s10961-021-09899-6
    DOI: 10.1007/s10961-021-09899-6
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    More about this item

    Keywords

    Equity Crowdfunding; P2P Lending; Fintech; COVID-19; Bank Consumer Lending;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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