Effects Of Public Information On P2P Lending Behavior And Information Screening

2013 is known as the first year of the Internet financial.From this year a series of innovative activities in financial industry have derived with the rapid development of internet.In June 2007,the first peer-to-peer(P2P)lending platform named “PPdai” successfully founded in China,and then followed by some akin platforms such as “Hongling Capital” and “Renrendai” successively.Peer-to-peer lending is booming as one of the new financing channels.Borrowers need to provide a variety of information,such as educational background,income,working hours and borrowing description,to pass the credit certification required by peer-to-peer lending platform.This information will be publicly displayed on the subject page of loan,affecting the investment decisions of the investors.However,due to the prevalence of information asymmetry in financial market,fundraisers may conceal or provide false information in order to improve the success rate of borrowing,which calls investors in the choice of subject to identify the authenticity of the disclosed information,as P2 P lending platform is just a financial intermediary and most of them only review the materials provided by the fundraisers.In this paper,based on the data on Renrendai,we figure out the effects of public information on P2 P lending behavior(including Borrowing successfully and repayment default)and observe whether there is information noise deceiving investors,which can help investors to screen public information.In the Probit model,we added the online reputation,work status and borrowing description as our variables,then use “sentence pause” to quantify the text readability of borrowing description creatively.The results showed that:(1)Online reputation affect the success rate of borrowing and reflect the risk of default objectively.The higher rate of pay off and the less number of overdue suggest that the lower risk of default,which is popular with investors.(2)Personal information do affect the success rate of borrowing,but some information is noise in revealing the risk of default,such as company size and income.They are difficult to identify and cause interference to investors.(3)Borrowing description provided voluntarily do affect the success rate of borrowing,but it can not accurately reveal the risk of default.Sentence pause is noise and causes interference to investors.