The highly renowned Journal of Accounting, Finance and Economics has accepted for publication an undergraduate research paper completed by Kevin McAleer (GSB ’11) when he was a senior last spring. It is an enormous honor for Kevin to be selected by a journal such as this one, which typically publishes the work of full-time researchers and professors — and it is a testament to the caliber of independent research done by Gabelli School of Business students.
For his original project, Kevin examined the phenomenon of online social lending, conducting a cross-cultural comparison between the United States and the United Kingdom. Social lending, also known as peer-to-peer lending, allows individuals to borrow from and lend money to one another. It often takes place online: People who want loans describe the funding they need on specialized web sites, where would-be investors go to search for appealing projects.
While social lending is more established in Europe, said Professor Laura Gonzalez, who was Kevin’s faculty adviser for the project, it has taken off in the United States in the last few years — partly because the 2008 market collapse reduced liquidity and made credit much harder to get. The way social lending works on either side of the pond may vary, Kevin discovered.
Kevin’s research is unique because while researchers have begun to investigate social lending’s opportunities and risks, “to our knowledge, there is no previous study on cross-country differences across platforms,” Professor Gonzalez said. Kevin chose to compare the United States and the United Kingdom because of the similarities in their capital markets, regulatory structures and language. He examined an industry-leading U.S. social lending site called Prosper and a U.K. counterpart called Zopa.
Kevin found that Prosper and Zopa differed, for example, in terms of the size of loans made and the interest rate agreed upon between the two parties. He also found that the time elapsed between the posting of a loan request and its fulfillment by an interested lender varied from country to country. In general, he discovered, U.K. lenders tended to loan out their money more slowly — and to propose higher rates.
Congratulations to Kevin on this landmark recognition. We look forward to seeing the paper in print.