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Peer effects in the online peer-to-peer lending market: Ex-ante selection and ex-post learning

Yes / This study investigates peer effects in the online peer-to-peer (P2P) lending market using data from a Chinese online lending platform, Renrendai. The empirical results indicate that both the borrowers' success rate in obtaining loans and the default rate after loans are deemed non-coercive among their peers, referred to as the peer effects of lending and peer effects of default, respectively. The peer effect of lending is more pronounced in high-risk cities, whereas the peer effect of defaulting is more pronounced for borrowers with more difficulty obtaining loans, indicating ex-ante selection and ex-post learning mechanisms, respectively. The peer effects of lending promote P2P lending market efficiency, and the peer effects of defaulting inhibit market efficiency. Collectively, our results suggest that both lenders and borrowers follow peer effects to reduce information asymmetry in P2P lending markets. / The full-text of this article will be released for public view at the end of the publisher embargo on 22 June 2025.

Identiferoai:union.ndltd.org:BRADFORD/oai:bradscholars.brad.ac.uk:10454/19830
Date09 February 2024
CreatorsHo, K.C., Gu, Y., Yan, C., Gozgor, Giray
Source SetsBradford Scholars
LanguageEnglish
Detected LanguageEnglish
TypeArticle, Accepted manuscript
Rights© 2023 Elsevier Inc. All rights reserved. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license., CC-BY-NC-ND

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