Abstract
We study the relationship between new intermediaries and regulatory arbitrage, analyzing marketplace credit around a tightening of mortgage loan-to-value (LTV) caps in several cities in China in 2013. Using novel data covering over 20% of Chinese marketplace credit as well as the universe of loans and loan applications at a leading online lending platform, we provide evidence consistent with home buyers borrowing online to bypass the tighter LTV cap. Our findings point to new, lightly regulated financial intermediaries as a driver of household leverage, suggesting that they can open nonnegligible regulatory arbitrage channels.
| Original language | English |
|---|---|
| Pages (from-to) | 5695-6415 |
| Journal | Management Science |
| Volume | 69 |
| Issue number | 10 |
| DOIs | |
| Publication status | Published - Oct 2023 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 10 Reduced Inequalities
Keywords
- online marketplace credit
- household leverage
- macroprudential regulation
- loan-to-value caps
- Chinese financial system
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