Name
Title | ||
|---|---|---|
Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending |
Abstract | ||
|---|---|---|
We study the online market for peer-to-peer P2P lending, in which individuals bid on unsecured microloans sought by other individual borrowers. Using a large sample of consummated and failed listings from the largest online P2P lending marketplace, Prosper.com, we find that the online friendships of borrowers act as signals of credit quality. Friendships increase the probability of successful funding, lower interest rates on funded loans, and are associated with lower ex post default rates. The economic effects of friendships show a striking gradation based on the roles and identities of the friends. We discuss the implications of our findings for the disintermediation of financial markets and the design of decentralized electronic markets. This paper was accepted by Sandra Slaughter, information systems. |
Year | DOI | Venue |
|---|---|---|
2013 | 10.1287/mnsc.1120.1560 | Management Science |
Keywords | Field | DocType |
p2p lending marketplace,sandra slaughter,p2p lending,online friendship,credit quality,largest online,decentralized electronic market,information asymmetry,friendship networks,lower interest rate,online market,lower ex post default,online peer-to-peer lending,social networks,signaling | Information system,Economics,Information asymmetry,Social network,Friendship,Peer-to-peer,Microeconomics,Disintermediation,Interest rate,Financial market,Marketing | Journal |
Volume | Issue | ISSN |
59 | 1 | 0025-1909 |
Citations | PageRank | References |
99 | 5.96 | 22 |
Authors | ||
3 | ||
Name | Order | Citations | PageRank |
|---|---|---|---|
| Mingfeng Lin | 1 | 202 | 11.51 |
| Nagpurnanand R. Prabhala | 2 | 108 | 6.72 |
| Siva Viswanathan | 3 | 327 | 29.10 |