N°23-78: Marketplace Lending: A Resilient Alternative in the Face of Natural Disasters?

What is the role played by marketplace lending after natural disasters? Analyzing a sample of more than one and a half million observations from Lending Club around the 33 worst natural disasters that occurred between 2013 and 2017, we find that there is an increase in the demand for marketplace loans by almost 10%. Yet, the platform does not restrict lending to individuals in the affected areas, nor do we observe an increase in interest rates. Interestingly, the performance of borrowers who receive loans after a natural disaster is not significantly different from the borrowers during normal times, indicating that the platform is competent at efficiently meeting the extra loan demand.