Abstract

Online peer-to-peer (P2P) lending is a nascent but burgeoning marketplace that is expected to transform the landscape of the finance industry. Although, this topic is crucial, studies on the performance of individual investors in the P2P lending marketplace are few. The majority of P2P lending platforms add more intermediation or platform-based investment to improve product offerings and market efficiency. However, research on the performance of those different types of “re-intermediation” is limited. A unique and complete dataset from PPDai.com indicates that almost 95% of individual investors on the online peer-to-peer lending market generally do not obtain returns commensurate to the amount of systematic risks they assume. The performance of the different types of “re-intermediation”, such as portfolio tools and financial products, is not statistically distinguishable from that of the market. Nevertheless, the returns of these “re-intermediation” are less volatile, which shows most individuals can benefit from these types of “re-intermediation”.

Key words: Peer-to-peer lending, performance, individual investor, re-intermediation.