主管:中国科学院
主办:中国优选法统筹法与经济数学研究会
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Chinese Journal of Management Science ›› 2018, Vol. 26 ›› Issue (10): 30-40.doi: 10.16381/j.cnki.issn1003-207x.2018.10.004

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Wisdom of Crowds from P2P Lending Investors

LIAO Li, XIANG Jia, WANG Zheng-wei   

  1. PBC School of Finance, Tsinghua University, Beijing 100083, China
  • Received:2017-09-11 Revised:2018-03-09 Online:2018-10-20 Published:2018-12-25

Abstract: The de-professionalized trend in Internet financial investment highlights the significance of crowd views, and the wisdom of crowd is increasingly attracting researchers' attention. The objective of this study to explore the predictive power of crowd views towards default rate by analyzing the evidence from P2P lending. The transaction data from Renrendai, a main P2P lending platform in China, is employed and the herding measure index of each loan is constructed for data analysis. It is found that the default rate of loan decreases as the herding effect of investors boosts under the control of all the other characteristics of loans and borrowers using Probit regression model. Further, regarding two loans with very similar characteristics, the loan with stronger herding effect is significantly less likely to default compared with the loan with weaker herding effect using the propensity score matching method. Herding, therefore, is informative in judging the probability to default. The duration analysis also indicates that loans with higher herding effect will significantly be less likely to default in the next month conditional on the loan repaid punctually for several months. With all the conclusion above, it is concluded that the crowd has wisdom in P2P investment and the wisdom of crowd offers new information to this investment. This conclusion is also helpful during investors' investment decisions process.

Key words: wisdom of crowd, herding, P2P lending

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