Risk Preference And Behavior Characteristics Of P2P Lending Investors

As an important factor affecting market operation and market efficiency,investors’ behavioral characteristics has attracted more and more attention from financial researchers in recent years,which also leads to the emergence of important branches in behavioral finance.However,due to the availability of data source,most of the existing studies on investors’ behavioral characteristics in financial markets are focused on investors in the stock market,bond market and other on-site trading markets.For traditional private lending market,because the transaction process is mostly completed through small loan companies,underground banks or private lending documents,it is difficult for regulators and researchers to obtain detailed and accurate trading data about individual investors,which brings difficulties for the research of investors’ behavioral characteristics in the private lending market.Fortunately,the rapid development of P2P lending helps us to solve the problem of data availability when studying investors’ behavioral characteristics in the private lending market.P2P lending is the expansion and innovation of traditional private lending through Internet technology,whose essence is still the private lending,which belongs to the category of the lending market.On one hand,because borrowers and investors do not have direct contact in P2P lending,the P2P lending platform,as an information intermediary,will examine borrowers’ personal information comprehensively,and will present it to investors in a standardized form truthfully,so it can solve the problem of lack of sufficient and accurate standardized data when studying the investors’ behavioral characteristics in the private lending market previously.On the other hand,P2P lending provides a new investment opportunity for investors who are difficult to participate in private lending in the past.Because most of the investors who participate in P2P lending have no experience in private lending and investment,and the risk structure of P2P lending is quite different from the stock,bond or fund products that people usually invest in,so it is particularly important to identify investors’ risk preferences and behavioral characteristics in this new financial type,which is of great significance for macro-financial supervision,meso-platform construction and micro-investment selectionIn view of this,in order to make up for the relative lack of existing research on investors’ behavioral characteristics in the lending market,and to get a more comprehensive and deeper understanding of the rapid development of P2P lending market in China from the perspective of investors,taking the group of investors in P2P lending as the research object and the investors’ behavioral characteristics and risk preference in P2P lending as the breakthrough point,this paper progressively analyses:(1)the risk preference of P2P lending investors,(2)the rational consciousness of P2P lending investors under specific risk preference,and(3)the bounded rational behavior characteristics of P2P lending investors under bounded rationality.As for the risk preference of P2P lending investors,this paper finds that the overall risk performance of P2P lending investors is risk aversion.When the interest rate is more than 11%,the risk aversion characteristics of the P2P lending investors will show significantly.Furthermore,the risk aversion characteristics will affect the choice performance of P2P lending investors on the P2P lending platform,and make the ability of interest rate to reflect the default rate partially invalid.These results help us to deduce the monotonous utility function of rational investors,which lay a foundation for the analysis of rational consciousness of P2P lending investors in the next step.As for the rational consciousness of P2P lending investors,this paper constructs a relevant model to test the rational consciousness of P2P lending investors.The empirical results show that the P2P lending investors in China indeed have rational consciousness.This conclusion proves that P2P lending investors are at least bounded rational investors,so that we can further study the bounded rational behavior characteristics of P2P lending investors from the perspective of investment returnAs for the bounded rational behavior characteristics of P2P lending investors under bounded rationality,this paper chooses "herding behavior" and "gender preference" to analyze.Empirical results show that Chinese P2P lending investors remarkably show herding behavior and gender preference for female borrowers.Further,this paper studies the driving factors behind herding behavior and gender preference.Finally,this paper shows that herding behavior and gender preference can improve the investing efficiency and investment return of P2P lending investors.This conclusion proves that some of the bounded rational behavioral characteristics,which contradict the premise of the effcient market hypothesis,do not harm the investment process of investors directly.On the contrary,these behavioral characteristics enhance the investing efficiency and investment return of investors,which can be regarded as some kind of "beneficial behavioral characteristics"As a summary,taking the characteristics of investors’ risk preference and behavior in P2P lending as the breakthrough point,this paper makes a comprehensive study of the specific manifestations of P2P lending investors’ risk preference,rational consciousness and bounded rational behavior characteristics.It makes up for the relative blank of the empirical research in behavioral finance about the private lending market investors and is helpful for academia and society to have a deeper understanding about the operating mechanism of private lending market.At the same time,this paper constructs a research framework based on expected utility theory to analyze investors’ behavior,which enriches the application of expected utility theory,and opens up more perspectives for later scholars’ research.Finally,the conclusions of this paper are of great significance for macro-financial supervision,meso-platform construction and micro-investment selection,which will help P2P lending market as well as the private lending market to develop formally and healthily in the future.