On Education Level and Terms in Obtaining P2P Funding: New Evidence from China

Junhui Xu, Jitka Hilliard and James Barth

International Review of Finance, 2020, vol. 20, issue 4, 801-826

Abstract: This paper examines the role of education in China's fast‐growing peer‐to‐peer (P2P) lending market. The level of education, as part of a borrower's profile, is an important yet relatively neglected factor that can affect both the demand and supply of credit in an increasingly more technologically oriented marketplace. With this in mind, we test the relationship between a borrower's education level and the interest rate, loan amount, and loan maturity based on more than 10,000 transactions from Renrendai.com. Controlling for a variety of other factors, we find on average that an individual with a higher education level obtains a lower interest rate, larger loan amount, and longer maturity. In contrast, less educated individuals pay higher interest rates, obtain smaller loans, and for shorter time periods.

Date: 2020
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