Platforms increasingly partner with banks to finance users, but partnership structures differ across platforms and over time. We model a capital-constrained, informed platform that partners with a capital-rich, uninformed bank, choosing between intermediation (on-lending bank funds) and information provision (sharing borrower data). The tension is that the platform internalises network externalities from on-platform trade but the bank does not, and the degree of this conflict is endogenous to the partnership choice. Our main result is a regime switch in borrower pool size: information provision, if sufficiently credible, is optimal for small pools and intermediation for large pools, and the switching threshold increases with this credibility. Buy Now, Pay Later (BNPL) buyer financing makes information provision in merchant financing more attractive when the BNPL provider places greater value on enabled trades.
Presented at: EEA-ESEM, Econometric Society North American Summer Meeting, Bank of Italy–Bocconi–EIEF–CEPR Conference on Financial Stability and Regulation, Asian Finance Association, IBEFA Summer Meeting, Edinburgh Financial Technology Conference, Benelux Corporate Finance Days, Dutch Economists’ Day, Bundesbank–Frankfurt Summer School, University of Amsterdam