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) | 6271-6292 |
| Number of pages | 22 |
| Journal | Management Science |
| Volume | 69 |
| Issue number | 10 |
| Early online date | 2022 |
| DOIs | |
| Publication status | Published - Oct 2023 |
Bibliographical note
Publisher Copyright:© 2022 INFORMS.
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