Template-Type: ReDIF-Paper 1.0
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo 
Author-X-Name-Last: Gambacorta
Author-Name: Leonardo Madio 
Author-X-Name-First: Leonardo 
Author-X-Name-Last: Madio 
Author-Name: Bruno Maria Parigi
Author-X-Name-First: Bruno Maria
Author-X-Name-Last: Parigi  
Title: Platform lending and innovation
Abstract: We analyse the impact of platform lending on innovation and e-commerce vendors' surplus. The platform generates revenues from both lending and marketplace fees, and can use lending to price discriminate vendors, thereby leading to higher marketplace fees and below-market interest rates. While platform lending can encourage innovation by providing access to subsidised credit, it can harm vendors who do not have financial needs. A sufficient condition for platform lending to be welfare-enhancing is that innovators would not receive funding from banks otherwise. However, if innovators would receive funding from banks, platform lending may reduce the overall vendor surplus. Cream skimming arises when the platform has better information than the bank about the prospects of the innovators' projects. To address the potential negative effects of platform lending on vendors' surplus, we also explore the impact of different regulatory instruments.
Creation-Date: 2023-11
File-URL: https://www.bis.org/publ/work1142.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1142.htm
File-Format: text/html
Number: 1142
Keywords: platform lending, big tech, online platforms, credit, innovation
Classification-JEL: G20, L86, O31
Handle: RePEc:bis:biswps:1142