Does automatic bidding mechanism affect herding behavior? Evidence from online P2P lending in China

Cuixia Jiang, Qifa Xu, Weiming Zhang, Mengting Li and Shanlin Yang

Journal of Behavioral and Experimental Finance, 2018, vol. 20, issue C, 39-44

Abstract: Recently, online P2P lending has become one of the typical modes of Internet finance. Its automatic bidding mechanism greatly improves transaction efficiency and saves transaction time. We study the herding behavior under the environment of automatic bidding mechanism through panel data regression on the transaction information from the PaiPaiDai, one of the largest P2P lending platforms in China. We find that herding behavior exists in online P2P lending. The automatic bidding mechanism is able to weaken herding effect and presents a rational herding behavior. Its behavior is very similar to those real variables, such as loan amount and loan period.

Keywords: P2P; Automatic bidding mechanism; Herding behavior; Rational herding effect; Panel data regression (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:20:y:2018:i:c:p:39-44

DOI: 10.1016/j.jbef.2018.07.001

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