Empirical Study On The Relationship Between Borrower's Transaction Cost Of P2P And Platform Reputation

The prosperity of P2 P lending platform has effectively improved the utilization efficiency of idle funds in society and the convenience of online lending,which greatly meet the domestic investment and financing needs of our country,but a large number of negative news still were brought about.Lending platforms and investors,investors cannot identify the risks,thus causing losses as a result of the asymmetric information among borrowers.However,investors can definitely reduce information asymmetry in the market by judging reputation signals.Previous studies have investigated that the reputation characteristics of borrowers have important effects on the online lending transaction deals.We can catch that there is also a serious asymmetric information problem between the platform and its participants during this age of a growing lending platform age.As a result,this paper mainly studies the issue that platform reputation as a quality signal affects participants' behavior and subsequently affecting the risk premium of investors related to the lending transactions.This paper highlights the impact of online platform reputation on transaction interest rates through cross-level effects.In details,this study investigates the interaction effect between platform reputation and personal reputation related to the transaction rate of both borrowers and lenders.Firstly,we discuss the related implications of practice,research literature.Secondly,this paper identifies the internal mechanism of the influence of platform reputation on transaction interest rate by the signaling theory game model of reputation in online lending.Platform reputation can form a separated Nash equilibrium to help investors identify risks and reduce asymmetric information problem leading to affecting investors' expectations of risk premium.Finally,the supposition and theory model were confirmed and revised though multilevel linear model(HLM)after collecting 6265 cross sectional data from 34 platforms.As a consequence,we have proposed our main conclusions as follows:(1)The role of platform reputation is to reduce asymmetric information problem in trading process,to reduce investors' perception of risk and risk premium,and further affect the interest rate of the lending and trading platform;(2)There exist a significant negative relationship between the reputation characteristics of the online lending platform and the transaction rate,which indicates that the platform reputation indeed reduce the transaction rate by influencing the investment and financing behavior through signal transmission;(3)The interaction effect between reputation characteristics and personal reputation of online lending platforms may have an impact on transaction rates,in other word,the risk premium of borrower reputation is influenced by platform reputation.Based on the above conclusions,this paper further argues that investors will reduce risk premium when identifying risks according to platform reputation signals.As a consequence,the following proposals are put forward for the implication: on the one hand,we believe that a more reputable lending platform will be chosen not only by rational investors to avoid risks but also by rational borrowers to reduce their financing costs.On the other hand,the platform with a better reputation is more likely to attract both investors and borrowers,it is also important that platform should give more pricing power to both investors and borrowers as an intermediary role.In addition,a stricter risk controlling and regulatory mechanisms need to be implemented by the government.