Market Mechanisms in Online Peer-to-Peer Lending

Zaiyan Wei  and Mingfeng Lin discovered market mechanisms of which business model is better for both lenders and borrowers by using data from Prosper.com. The main finding is that under platform-mandated posted prices, loans are funded with higher probability, but the pre-set interest rates are higher than borrowers’ starting interest rates and contract interest rates in auctions, and loans funded under posted prices are more likely to default.Read more

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