Work

Stereotypes in Person-to-Person Lending: Evidence from Debt Crowdfunding

Year: 2017

Type: preprint

Abstract: How much do stereotypes affect person-to-person economic exchange? We present evidence from a debt-crowdfunding website that individual borrowers from high social capital regions enjoy higher funding success, larger loan size and bid size, lower interest rates, and more concentrated loan ownership. The effect is more pronounced among borrowers of no credit history or lower quality. Dyadic data show lenders from regions higher in social capital offer smaller loans at higher interest rates to borrowers from lower social capital regions. We consider a range of explanations and find our results most easily explained by investors using region-based stereotype as a heuristic in making credit decisions.

Source: SSRN Electronic Journal

Authors: Iftekhar Hasan, Qing He, Haitian Lu

Institutions: The University of Sydney, Fordham University, Bank of Finland, Renmin University of China, Hong Kong Polytechnic University

Language: English

Topic: FinTech, Crowdfunding, Digital Finance

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Reduced inequalities

Open Access status: green

OpenAlex ID: W3012385101

Cites: 65

Cited by: 6

Related to: 10