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Does social capital matter for peer-to-peer-lending? Empirical evidence

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  • Lu, Haitian
  • Wang, Bo
  • Wang, Haizhi
  • Zhao, Tianyu

Abstract

This paper examines the relation between regional social capital and online peer-to-peer loans. The results indicate that borrowers from states with higher levels of social capital are less likely to be rejected during loan application, have a lower probability of default, and experience lower borrowing cost. In addition, loans granted to borrowers in states with higher levels of social capital yield higher rates of return after controlling for the loan defaults and loan prepayment. The effects of social capital on peer-to-peer loans are stronger in regions with more bank competition and for loans with higher risks.

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  • Lu, Haitian & Wang, Bo & Wang, Haizhi & Zhao, Tianyu, 2020. "Does social capital matter for peer-to-peer-lending? Empirical evidence," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:pacfin:v:61:y:2020:i:c:s0927538x20300767
    DOI: 10.1016/j.pacfin.2020.101338
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    More about this item

    Keywords

    Social capital; Peer-to-peer lending; Bank competition;
    All these keywords.

    JEL classification:

    • B55 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Social Economics
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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