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The Geography of Lender Behavior in Peer‐to‐Peer Loan Markets

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  • Garrett T. Senney

Abstract

This paper empirically investigates the role of geography in online peer‐to‐peer loan markets. Using transaction level data, I find strong evidence that lenders are more informed about local projects and have higher demand for better performing local projects. This effect is shown to be driven by informational frictions. Additionally, listings with more early local bidding attract more lenders, leading to a higher probability of funding and a lower final interest rate, if funded. My results are consistent with localness embodying some incidentally obtained initial informational advantage which rationally causes persistent information asymmetries.

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  • Garrett T. Senney, 2019. "The Geography of Lender Behavior in Peer‐to‐Peer Loan Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 67(1), pages 1-36, March.
    • Handle: RePEc:bla:jindec:v:67:y:2019:i:1:p:1-36
    DOI: 10.1111/joie.12195
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