COVID-19 bust, policy response, and rebound: equity crowdfunding and P2P versus banks.

Traditional intermediaries have the ability and the incentive to intertemporarily smooth outcomes. Fintechs, such as peer-to-peer (P2P) lending platforms and equity crowdfunding (ECF) platforms, enable riskier projects without regard to intertemporal smoothing. U.S. data from May 2016 to June 2020 show that COVID-19 had an adverse impact on bank consumer lending. However, counter to our expectations, ECF and P2P are much more stable, timely, and resilient in the COVID-19 crisis compared to bank consumer lending. Moreover, the data indicate that P2P lending is a leading indicator for bank consumer lending and that bank consumer lending substitutes ECF. The policy response-CARES Act-caused: (1) a significant increase in ECF volumes, (2) a substantial rebound to bank consumer lending, and iii) at best, neutralized an already-stabilized level of P2P lending.