Supply and demand on crowdlending platforms: connecting small and medium-sized enterprise borrowers and consumer investors

Abstract

Consumer crowdlending to small and medium enterprises is an increasingly relevant financial service phenomenon which depends on platforms as an intermediary. To match borrowers’ supply of loan requests and customers’ investment demand, this article proposes that crowdlending platforms need to initiate double switching behavior. On the one hand, switching of enterprise borrowers from traditional bank financing to crowdlending is driven by greater convenience (speed, flexibility, simplicity) and process transparency. Consumers, on the other, predominantly invest in crowdlending loans based on their economic performance relative to the choice set on the platform. We contribute to the literature on crowdfunding, satisfaction and switching in financial services.