Journal
ELECTRONIC COMMERCE RESEARCH
Volume 19, Issue 1, Pages 131-158Publisher
SPRINGER
DOI: 10.1007/s10660-018-9291-1
Keywords
Online P2P (peer-to-peer) lending; Online P2P platform default risk; Electronic commerce
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Most previous literatures focus on the micro level default risk of individual borrowers whereas the platform default risk has not been rigorously studied yet. In this paper, we investigate the factors affecting platform default risk by employing the Chinese online P2P platform data. We find significant evidence that severe competition among platforms can increase risky behaviors of platforms by allowing riskier borrowers into the system. Some of the risk management devices could alleviate the default risk of platforms; however, others are not effective at alleviating the default risks. In addition, we find evidence that macro environment such as stock market condition or increases in speculative investment opportunities plays critical roles to increase the platform default rate. Our study sheds light on the platforms' default risk issues and verifies key factors that influence their risky behaviors.
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