Paper Info
Title
When Online Lending Meets Real Estate: Examining Investment Decisions In Lending-Based Real Estate Crowdfunding
Abstract
In lending-based real estate crowdfunding, borrowers are required to pledge their housing properties as collateral to secure the loans. This nascent practice differs from ordinary peer-to-peer lending in that lenders, to make sound investment decisions, need to process additional information other than basic loan attributes. We examine how lender behavior of investing in real-estate-secured loans is shaped by information that is particularly relevant in such an emerging market. We collect and analyze the data from a large lending-based real estate crowdfunding platform, where each loan is secured by either a mortgage (a mortgage-secured or MS loan) or a borrower's own house (a house-secured or HS loan). Our analysis reveals that lender decisions of how fast to invest and how much to invest are influenced by both on-platform and off-platform information. For on-platform information, we find that lenders as a whole prefer HS loans to MS loans, as reflected in quicker and larger lending transactions. Experienced lenders tend to invest more aggressively, in both time and amount, but exhibit a weaker preference for HS loans as compared with their inexperienced counterparts. As to off-platform information, our results show that a rise in housing prices is associated with quicker investment decisions, and this association is found to be even stronger on HS loans. Further, when stock market volatility is large, lenders tend to slow down their investment behavior; however, we find such a tendency weaker on MS loans. This research contributes to the literature by establishing relationships between crowdfunding activities, housing prices and stock market performance. Our findings also provide implications for managers and platform designers who desire to stimulate and leverage the fundraising momentum.
Year
DOI
Venue
2020
10.1287/isre.2019.0909
INFORMATION SYSTEMS RESEARCH
Keywords
DocType
Volume
crowdfunding, P2P lending, real estate, collateral, housing prices, stock market
Journal
31
Issue
ISSN
Citations 
3
1047-7047
0
PageRank 
References 
Authors
0.34
0
4
Name
Order
Citations
PageRank
Yang Jiang145.15
Yi-Chun (Chad) Ho201.01
Xiangbin Yan310016.96
Yong Tan426724.91