Lending Club’s Note Trading Platform Facade: An Examination of Peer-to-Peer (P2P) Lending Secondary Market Inefficiency

Author(s)

Stephen Harvey, University of Dayton

Advisor

Tony Caporale, Ph.D.

Department

Economics and Finance

Publication Date

4-2018

Document Type

Honors Thesis

Abstract

The original objective of the study was to monitor and analyze the inefficiencies in Lending Club’s Peer-toPeer (P2P) secondary market, in order to exploit these inefficiencies for a risk-free return. Upon a threemonth examination and analysis of the secondary market, the findings indicate that arbitrage conditions do not exist as a result of the observed volume of the marketplace being vastly lower than initially believed. Only 0.44% of note listing instances on Lending Club’s secondary market over the three-month period resulted in successful trades. As a consequence, investors assume a purported level of liquidity that is never met, thus they may incur a higher level of risk than initially estimated on the primary market at the time of issuance.

Permission Statement

This item is protected by copyright law (Title 17, U.S. Code) and may only be used for noncommercial, educational, and scholarly purposes

Keywords

Undergraduate research

Disciplines

Economics | Finance

eCommons Citation

Harvey, Stephen, "Lending Club’s Note Trading Platform Facade: An Examination of Peer-to-Peer (P2P) Lending Secondary Market Inefficiency" (2018). Honors Theses. 199.
https://ecommons.udayton.edu/uhp_theses/199