European Business Schools Librarian's Group
HEC Research Papers Series,
HEC Paris
No 1542: Platform Credit, Advertising, and Customer Capital
Matthias Efing (), Yi Huang, Ruobing Han, Qi Sun and Daniel Yi Xu
Additional contact information
Matthias Efing: HEC Paris
Yi Huang: Bank for International Settlements (BIS)
Ruobing Han: The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen)
Qi Sun: Shanghai University of Finance and Economics
Daniel Yi Xu: Duke University
Abstract: Advertising plays a particularly crucial role in online marketplaces, where thousands of merchants offer similar products and compete for visibility and consumer attention. This study theoretically and empirically demonstrates that merchants on e-commerce platforms often engage in "underadvertising" due to financial constraints. By leveraging quasi-random variation in merchants' access to credit from a major platform lender, we establish that alleviating financial constraints leads to substantial increases in advertising expenditures, enhanced shop visibility among customers, and ultimately, accelerated sales growth. Notably, high-quality merchants with top customer ratings are especially likely to utilize platform credit to invest in advertising.
Keywords: platform credit; platform lending; e-commerce
JEL-codes: G21; G23; L10; L81; M30
49 pages, April 1, 2025
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