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Does automatic bidding mechanism affect herding behavior? Evidence from online P2P lending in China

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  • Jiang, Cuixia
  • Xu, Qifa
  • Zhang, Weiming
  • Li, Mengting
  • Yang, Shanlin

Abstract

Recently, online P2P lending has become one of the typical modes of Internet finance. Its automatic bidding mechanism greatly improves transaction efficiency and saves transaction time. We study the herding behavior under the environment of automatic bidding mechanism through panel data regression on the transaction information from the PaiPaiDai, one of the largest P2P lending platforms in China. We find that herding behavior exists in online P2P lending. The automatic bidding mechanism is able to weaken herding effect and presents a rational herding behavior. Its behavior is very similar to those real variables, such as loan amount and loan period.

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  • Jiang, Cuixia & Xu, Qifa & Zhang, Weiming & Li, Mengting & Yang, Shanlin, 2018. "Does automatic bidding mechanism affect herding behavior? Evidence from online P2P lending in China," Journal of Behavioral and Experimental Finance, Elsevier, vol. 20(C), pages 39-44.
    • Handle: RePEc:eee:beexfi:v:20:y:2018:i:c:p:39-44
    DOI: 10.1016/j.jbef.2018.07.001
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    Cited by:

    1. Peng, Hongfeng & Ji, Jiao & Sun, Hanwen & Xu, Haofeng, 2023. "Legal enforcement and fintech credit: International evidence," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 214-231.
    2. Jen-Yin Yeh & Hsin-Yu Chiu & Jhih-Huei Huang, 2023. "Predicting Failure of P2P Lending Platforms through Machine Learning: The Case in China," Papers 2311.14577, arXiv.org.
    3. Yingxiu Zhao & Wei Zhang & Pengfei Wang & Dehua Shen, 2020. "Borrower platform choice: The influencing factors on herding," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-12, March.
    4. Zanin, Luca, 2020. "Combining multiple probability predictions in the presence of class imbalance to discriminate between potential bad and good borrowers in the peer-to-peer lending market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 25(C).

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