Complements Rather Than Substitutes: An Empirical Examination of Cryptocurrency and Online Peer-to-Peer Lending Markets

The authors develop a conceptual framework and derive testable predictions regarding effects of cryptocurrency markets on borrowers in peer-to-peer (P2P) lending markets from January 2017 to February 2019. Results indicate that the growth in cryptocurrency markets is associated with increased loan requests in the P2P market, especially for borrowers with good credit ratings, more knowledge about the cryptocurrency market, and likely to borrow for investing purposes. The findings imply that the P2P lending market is potentially a funding source for investment in the cryptocurrency market. The growth in cryptocurrency markets is further associated with low default and interest rates. The study has unique and important implications for theory and practice regarding the appropriate management of crowdfunding platforms to sustain a new wave of financial technology.