The role of punctuation in P2P lending: Evidence from China

I introduced the role of text information in P2P lending in previous post. Human can express their opinion and purpose by complex tone. The punctuation usually represents the full logic of human thinking in written language, which reflects people’s education level. Written Chinese words are strung together one after another. There are no gaps or spaces indicating breaks between words. We can find it natural to pick out words in the Chinese sentence despite this, but different combination of words can be various of meaning. A recent published paper studies the role of punctuation in P2P lending. Chen et al. (2017) employed data from, a leading P2P platform in China.

The authors investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate.  The usage of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability. Within a given number of words, excessive usage of punctuation makes loan description informal and reduces the readability of the text, thereby impairing investors’ trust in borrowers. Moreover, borrowers that overuse punctuation may have lower ability of self-control, and tend to underestimate the risk of borrowing and offer lower borrowing rate due to overconfidence.

The full paper see Here


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