On the effects of misspellings on lender demand in peer-to-peer lending

Randall J. Hucks

International Journal of Electronic Finance, 2023, vol. 12, issue 4, 374-402

Abstract: I analyse borrower submitted free-form descriptions of anonymous peer-to-peer (P2P) loans from the US-based P2P lending website LendingClub.com and find that borrower misspellings predict lower funding rates, and longer times to fund. Prior empirical studies suggest that poor spelling in peer-to-peer lending disclosures is used as a substitute for hard credit information; my findings show that poor spelling is perceived as a signal of the communicator's quality regardless of the quality of the information environment. Further, I demonstrate that the negative relation between misspelling and lender demand holds generally, regardless of borrower or loan characteristics, confirming prior experimental research.

Keywords: peer to peer lending; P2P lending; LendingClub; lending club; USA; spelling; misspelling; lender demand; textual analysis; time-to-fund; fintech; financial technology. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijelfi:v:12:y:2023:i:4:p:374-402

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