Borrower’s default and self-disclosure of social media information in P2P lending

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Abstract

Background: We examine the signaling effect of borrowers’ social media behavior, especially self-disclosure behavior, on the default probability of money borrowers on a peer-to-peer (P2P) lending site. Method: We use a unique dataset that combines loan data from a large P2P lending site with the borrower’s social media presence data from a popular social media site. Results: Through a natural experiment enabled by an instrument variable, we identify two forms of social media information that act as signals of borrowers’ creditworthiness: (1) borrowers’ choice to self-disclose their social media account to the P2P lending site, and (2) borrowers’ social media behavior, such as their social network scope and social media engagement. Conclusion: This study offers new insights for screening borrowers in P2P lending and a novel usage of social media information.

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APA

Ge, R., Feng, J., & Gu, B. (2016). Borrower’s default and self-disclosure of social media information in P2P lending. Financial Innovation, 2(1). https://doi.org/10.1186/s40854-016-0048-3

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