Too long to be true in the description? Evidence from a Peer-to-Peer platform in China

Zhiyong Li, Haiyang Zhang, Mei Yu and Hairan Wang

Research in International Business and Finance, 2019, vol. 50, issue C, 246-251

Abstract: This paper explores how loan descriptions provided by borrowers influence both the lenders’ and the platform’s behaviour in granting loans and setting interest rates. The empirical results show that textual length serves as a strong signal to identify the borrowers' quality. Strategic signalling theories cannot explain the borrowers' behaviour in China. We further show that the peer-to-peer platform is able to benefit from taking description length into consideration and that there exists room for investors to benefit from this information.

Keywords: Peer-to-Peer lending; Signalling; Description length (search for similar items in EconPapers)
JEL-codes: D12 G20 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:50:y:2019:i:c:p:246-251

DOI: 10.1016/j.ribaf.2019.06.005

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