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Zhu, H., Manconi, A. and Braggion, F. (2023). Household Credit and Regulatory Arbitrage: Evidence from Online Marketplace Lending Management Science, 69(10):6271--6292.

  • Affiliated author
    Yuhao Zhu
  • Publication year
    2023
  • Journal
    Management Science
View publication

We study the relationship between new intermediaries and regulatory arbitrage, analyzing marketplace credit around a tightening of mortgage loan-to-value (LTV) caps in several cities in China in 2013. Using novel data covering over 20% of Chinese marketplace credit as well as the universe of loans and loan applications at a leading online lending platform, we provide evidence consistent with home buyers borrowing online to bypass the tighter LTV cap. Our findings point to new, lightly regulated financial intermediaries as a driver of household leverage, suggesting that they can open nonnegligible regulatory arbitrage channels.