Asymmetric Cross-side Network Effects on Digital Platforms: Evidence from Marketplace Lending

Using data on 988 peer-to-peer (P2P) lending platforms in China, authors examine the cross-side network effects (CNEs) throughout platform lifecycle in a dynamic industry characterized by entries, exits, and network externalities. The paper shows that unlike borrowers’ symmetric CNEs, lenders’ CNEs are smaller during platform declines than during platform growth and are predictive of future transaction volumes.
.png)
.png)
.png)