Big data pricing in marketplace lending and price discrimination against repeat borrowers: Evidence from China

Geran Tian and Weixing Wu

China Economic Review, 2023, vol. 78, issue C

Abstract: In this work, we systematically investigate the pricing mechanism change from auction to big data pricing on one of the major marketplace lending platforms in China. We find that big data pricing reduces the average interest rate while the borrowers with delinquency or default histories are assigned higher interest rates. However, repeat borrowers are also faced with growing interest rates, even though they have been paying their debts on time. Further analysis shows that repeat borrowers have lower income and education levels. Moreover, investor returns become less dispersed after pricing with big data, which can be a result of homogeneous loans on the market. The implications of the above findings are discussed.

Keywords: Big data; Fintech; Marketplace lending; Peer-to-peer lending; Price discrimination; Fair lending; Behavior-based price discrimination (search for similar items in EconPapers)
JEL-codes: D14 G21 G23 G51 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:78:y:2023:i:c:s1043951x23000299

DOI: 10.1016/j.chieco.2023.101944

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