Do local capital market conditions affect consumers' borrowing decisions?

Alexander W. Butler, Jess Cornaggia, Umit G. Gurun

Research output: Contribution to journalArticlepeer-review

49 Scopus citations


This paper uses detailed data from an online peer-to-peer lending intermediary to test whether local access to finance affects consumers' willingness to pay for loans. After controlling for local economic conditions and borrower credit quality, we find that borrowers who reside in areas with good access to bank finance request loans with lower interest rates. This effect is stronger for borrowers with poor credit and those seeking small loans, suggesting that local access to finance is more important for marginal borrowers. Overall, our findings shed light on how consumers substitute between alternative sources of finance.

Original languageEnglish (US)
Pages (from-to)4175-4187
Number of pages13
JournalManagement Science
Issue number12
StatePublished - Dec 2017

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research


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