 The impact of public corruption on marketplace lending outcomesAbdulkader Kaakeh and Simon C. Parker Journal of Banking & Finance, 2025, vol. 177, issue C Abstract: This study investigates the impact of public corruption on lending outcomes in the context of Marketplace Lending (MPL) platforms such as LendingClub. Utilizing data on over one million loans and state-level corruption metrics from the US Department of Justice, this research uniquely examines within-country variations in corruption. Our findings reveal a significant correlation between public corruption and loan defaults, with a 3 % increase in default rates per unit increase in corruption. Interest rates also rise by 9 basis points under similar conditions. These effects persist across various model specifications and robustness checks. We demonstrate that trust mediates the relationship between corruption and loan defaults, and that neither governance nor enforcement explains the observed impacts. This study contributes to the literature by linking corruption to individual financial behavior in fintech lending, highlighting the crucial role of trust in financial transactions. Keywords: Marketplace lending; Public corruption; Default; Trust; Pricing; Regulatory governance; Contract enforcement (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:177:y:2025:i:c:s0378426625000925 DOI: 10.1016/j.jbankfin.2025.107472 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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