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Herd Behavior and Its Effects on Default in Chinese Microcredit

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  • Ya Bu
  • Shouzhe Zhang
  • Anzhong Huang
  • Shaohui Wang

Abstract

Herd behavior means a mode of behavior will be infected among the individuals in a group, and its existence and influence in specific financial market are uncertain. The paper utilizes the logistic model to test the existence and influence of herd behavior of borrowers in Chinese microcredit market. We find that (1) herd behavior exists in Chinese microcredit market, (2) the two most important factors affecting the default of microcredit resulted from herd behavior are the nature of microcredit institutions and the education level of borrowers, and (3) herd behavior will increase the possibility of default, but it is relatively small.

Suggested Citation

  • Ya Bu & Shouzhe Zhang & Anzhong Huang & Shaohui Wang, 2021. "Herd Behavior and Its Effects on Default in Chinese Microcredit," Complexity, Hindawi, vol. 2021, pages 1-5, August.
    • Handle: RePEc:hin:complx:9229871
    DOI: 10.1155/2021/9229871
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