Zhang, J., Zhang, W., Li, Y. et al. (1 more author) (2021) Seeking excess returns under a posted price mechanism: Evidence from a peer‐to‐peer lending market. The Manchester School, 89 (5). pp. 486-506. ISSN 1463-6786
Abstract
This study examines the performance of a new online peer‐to‐peer (P2P) lending platform in China that relies on non‐expert individuals to screen for loans. Using the bank deposit rate as a benchmark, positive excess returns exist under the posted price mechanism, which indicates that P2P markets provide lenders with adequate profit opportunities to compensate for investment risks. Moreover, we find that loans with higher excess returns are more likely to be funded and are bid on more quickly than other loans. Finally, voluntarily disclosed soft information in the listing's description plays a significant moderating role in the lenders’ decision‐making process. Borrowers who promise to repay on time are more likely to be funded and to be funded faster, but those who claim economic hardship have a lower probability of being funded. Our results provide evidence that lenders have the ability to seek excess returns in P2P lending markets and highlight that aggregating the views of peers can improve the market efficiency.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2020 The University of Manchester and John Wiley & Sons Ltd. This is an author-produced version of a paper subsequently published in Manchester School. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | excess returns; information asymmetry; moderating effect; peer‐to‐peer lending market; voluntary information disclosure |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 16 Jun 2020 15:24 |
Last Modified: | 15 Jun 2022 23:45 |
Status: | Published |
Publisher: | Wiley |
Refereed: | Yes |
Identification Number: | 10.1111/manc.12330 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:161965 |