TY - JOUR
T1 - Voluntary disclosure in P2P lending
T2 - Information or hyperbole?
AU - Wang, Chao
AU - Wang, Junbo
AU - Wu, Chunchi
AU - Zhang, Yue
PY - 2023/6
Y1 - 2023/6
N2 - Using a robust textual analytic method, we decompose the P2P loan description into common and distinctive contents, which contain general and unique information provided by borrowers. We then investigate the role of the distinctive content in affecting P2P lending decisions and outcomes. Controlling for loan/borrower characteristics, loan applications with more distinctive content are more likely to be funded, and have larger amounts and longer maturity, but these loans carry higher interest rates and default probability. Overall, the evidence suggests that borrowers use self-reported loan descriptions to hype their loan applications rather than provide soft information to reduce information asymmetry. © 2023 Published by Elsevier B.V.
AB - Using a robust textual analytic method, we decompose the P2P loan description into common and distinctive contents, which contain general and unique information provided by borrowers. We then investigate the role of the distinctive content in affecting P2P lending decisions and outcomes. Controlling for loan/borrower characteristics, loan applications with more distinctive content are more likely to be funded, and have larger amounts and longer maturity, but these loans carry higher interest rates and default probability. Overall, the evidence suggests that borrowers use self-reported loan descriptions to hype their loan applications rather than provide soft information to reduce information asymmetry. © 2023 Published by Elsevier B.V.
KW - Default probability
KW - Distinctive content
KW - Hype
KW - Loan description
KW - Peer-to-peer lending
UR - http://www.scopus.com/inward/record.url?scp=85151694722&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-85151694722&origin=recordpage
U2 - 10.1016/j.pacfin.2023.102024
DO - 10.1016/j.pacfin.2023.102024
M3 - RGC 21 - Publication in refereed journal
SN - 0927-538X
VL - 79
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
M1 - 102024
ER -