The 10th International P2PFISY Workshop 2024 is being held in Dubai Learn More
Sonny Biswas
Min Park
Ziqing Yuan
University of Reading, University of Bristol Business School
2026
Credit market competition and the agency costs of tiered loan guarantees

The study finds that P2P lending entry draws higher-quality borrowers away from traditional channels, leaving a riskier pool of applicants for the SBA program. In response, participating lenders strategically exploit the tiered guarantee structure by downsizing loans to stay below thresholds with higher guarantee rates, thereby shifting more default risk onto the government. This strategic behavior is most pronounced among "Preferred Lenders" who have greater autonomy over credit decisions.