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How do distance constraints affect online lending? Evidence from the Chinese “RenRenDai” platform

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  • Chen, Xiao
  • Guo, Gangxing

Abstract

Using loan listing records from “RenRenDai”, a leading Chinese online lending platform, we investigate the impact of geographical distance on online lenders' decisions. We find that the greater distance between the lender and the borrower results in smaller loan amounts and longer consideration time. Two potential channels may explain these effects: the information acquisition channel and the social proximity channel. We provide evidence supporting the information acquisition channel with the staggered opening of high-speed railway (HSR) stations as an exogenous shock to information diffusion. However, we find no robust evidence supporting the social proximity channel. Our study enhances understanding of how distance frictions persist even in digitally intermediated markets, where face-to-face interactions are not required.

Suggested Citation

  • Chen, Xiao & Guo, Gangxing, 2026. "How do distance constraints affect online lending? Evidence from the Chinese “RenRenDai” platform," Global Finance Journal, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:glofin:v:70:y:2026:i:c:s1044028326000220
    DOI: 10.1016/j.gfj.2026.101254
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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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