Herding behaviour in P2P lending markets

Mustafa Caglayan (), Oleksandr Talavera () and Wei Zhang

Journal of Empirical Finance, 2021, vol. 63, issue C, 27-41

Abstract: We explore lender behaviour on Renrendai.com, a leading Chinese peer-to-peer (P2P) crowdlending platform. Using a sample of around five million investor-loan-hour observations, and applying a high-dimensional fixed effect estimator, we confirm evidence of herding behaviour: the investors in our sample prefer assets that had attracted strong interest in previous periods. The herding behaviour relates to both the experience level of the investor and the length of time of an investment session on the platform. We also provide evidence of significant herding behaviour in the first hour of experienced investors’ sessions. Our results are robust to the use of alternative specifications.

Keywords: FinTech; Peer-to-peer; Crowdlending; Herding; Investor experience (search for similar items in EconPapers)
JEL-codes: G21 G40 G41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:63:y:2021:i:c:p:27-41

DOI: 10.1016/j.jempfin.2021.05.005

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