IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v171y2024ics0148296323007531.html
   My bibliography  Save this article

Politeness matters: The role of polite languages in online peer-to-peer lending

Author

Listed:
  • Wang, Shaoda
  • Ye, Dezhu
  • Liao, Junyun

Abstract

Given the limited information for assessing borrowers in online peer-to-peer (P2P) lending, the textual content of loan requests has been recognized as a crucial factor influencing lenders' lending decisions. However, whether politeness, an important but largely neglected linguistic element in loan requests, is related to lenders' decisions remains underexplored. Drawing from signaling theory, this paper seeks to answer two important questions: (1) Is the use of polite language in loan requests related to lenders' decisions? (2) If so, for which types of borrowers or loans is politeness more beneficial? We test our theoretical framework using a sample of 127,044 loan requests from Renrendai, a leading online P2P lending platform in China. Our findings reveal a significant and positive relation between the use of polite language and the likelihood of successful funding. This positive relation is stronger for borrowers with higher credit ratings, higher education levels, as well as for loan requests with lower information richness and higher certainty in language. Our findings suggest that politeness functions as a costless signal that complements costly signals, reducing information asymmetry in P2P lending. This paper bridges the gap between the literature on the role of politeness in individual decision making and information asymmetry in financial markets, providing new insights into the role of language use in P2P lending.

Suggested Citation

  • Wang, Shaoda & Ye, Dezhu & Liao, Junyun, 2024. "Politeness matters: The role of polite languages in online peer-to-peer lending," Journal of Business Research, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:jbrese:v:171:y:2024:i:c:s0148296323007531
    DOI: 10.1016/j.jbusres.2023.114394
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296323007531
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2023.114394?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Norbert Steigenberger & Hendrik Wilhelm, 2018. "Extending Signaling Theory to Rhetorical Signals: Evidence from Crowdfunding," Organization Science, INFORMS, vol. 29(3), pages 529-546, June.
    2. Tajvarpour, Mohammad Hossein & Pujari, Devashish, 2022. "The influence of narrative description on the success of crowdfunding campaigns: The moderating role of quality signals," Journal of Business Research, Elsevier, vol. 149(C), pages 123-138.
    3. Cuiqing Jiang & Zhao Wang & Ruiya Wang & Yong Ding, 2018. "Loan default prediction by combining soft information extracted from descriptive text in online peer-to-peer lending," Annals of Operations Research, Springer, vol. 266(1), pages 511-529, July.
    4. Chen, Shiyi & Gu, Yan & Liu, Qingfu & Tse, Yiuman, 2020. "How do lenders evaluate borrowers in peer-to-peer lending in China?," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 651-662.
    5. Chen, Xiao & Huang, Bihong & Ye, Dezhu, 2018. "The role of punctuation in P2P lending: Evidence from China," Economic Modelling, Elsevier, vol. 68(C), pages 634-643.
    6. Donald D. Bergh & Brian L. Connelly & David J. Ketchen Jr & Lu M. Shannon, 2014. "Signalling Theory and Equilibrium in Strategic Management Research: An Assessment and a Research Agenda," Journal of Management Studies, Wiley Blackwell, vol. 51(8), pages 1334-1360, December.
    7. Xuchen Lin & Xiaolong Li & Zhong Zheng, 2017. "Evaluating borrower’s default risk in peer-to-peer lending: evidence from a lending platform in China," Applied Economics, Taylor & Francis Journals, vol. 49(35), pages 3538-3545, July.
    8. Jung‐ran Park, 2008. "Linguistic politeness and face‐work in computer mediated communication, Part 2: An application of the theoretical framework," Journal of the American Society for Information Science and Technology, Association for Information Science & Technology, vol. 59(14), pages 2199-2209, December.
    9. Dorfleitner, Gregor & Priberny, Christopher & Schuster, Stephanie & Stoiber, Johannes & Weber, Martina & de Castro, Ivan & Kammler, Julia, 2016. "Description-text related soft information in peer-to-peer lending – Evidence from two leading European platforms," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 169-187.
    10. Anglin, Aaron H. & Short, Jeremy C. & Drover, Will & Stevenson, Regan M. & McKenny, Aaron F. & Allison, Thomas H., 2018. "The power of positivity? The influence of positive psychological capital language on crowdfunding performance," Journal of Business Venturing, Elsevier, vol. 33(4), pages 470-492.
    11. Jung‐ran Park, 2008. "Linguistic politeness and face‐work in computer‐mediated communication, Part 1: A theoretical framework," Journal of the American Society for Information Science and Technology, Association for Information Science & Technology, vol. 59(13), pages 2051-2059, November.
    12. Kollenda, Philipp, 2022. "Financial returns or social impact? What motivates impact investors’ lending to firms in low-income countries," Journal of Banking & Finance, Elsevier, vol. 136(C).
    13. Parhankangas, Annaleena & Renko, Maija, 2017. "Linguistic style and crowdfunding success among social and commercial entrepreneurs," Journal of Business Venturing, Elsevier, vol. 32(2), pages 215-236.
    14. Balboa, Marina & Marti, Jose, 2007. "Factors that determine the reputation of private equity managers in developing markets," Journal of Business Venturing, Elsevier, vol. 22(4), pages 453-480, July.
    15. Wu, Yu & Zhang, Tong, 2021. "Can credit ratings predict defaults in peer-to-peer online lending? Evidence from a Chinese platform," Finance Research Letters, Elsevier, vol. 40(C).
    16. Anastasia Danilov & Dirk Sliwka, 2017. "Can Contracts Signal Social Norms? Experimental Evidence," Management Science, INFORMS, vol. 63(2), pages 459-476, February.
    17. Qun Chen & Ji-Wen Li & Jian-Guo Liu & Jing-Ti Han & Yun Shi & Xun-Hua Guo, 2021. "Borrower Learning Effects: Do Prior Experiences Promote Continuous Successes in Peer-to-Peer Lending?," Information Systems Frontiers, Springer, vol. 23(4), pages 963-986, August.
    18. Mingfeng Lin & Siva Viswanathan, 2016. "Home Bias in Online Investments: An Empirical Study of an Online Crowdfunding Market," Management Science, INFORMS, vol. 62(5), pages 1393-1414, May.
    19. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-1173, December.
    20. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    21. Pezzuti, Todd & Leonhardt, James M. & Warren, Caleb, 2021. "Certainty in Language Increases Consumer Engagement on Social Media," Journal of Interactive Marketing, Elsevier, vol. 53(C), pages 32-46.
    22. Qizhi Tao & Yizhe Dong & Ziming Lin, 2017. "Who can get money? Evidence from the Chinese peer-to-peer lending platform," Information Systems Frontiers, Springer, vol. 19(3), pages 425-441, June.
    23. Chen, Cathy W.S. & Dong, Manh Cuong & Liu, Nathan & Sriboonchitta, Songsak, 2019. "Inferences of default risk and borrower characteristics on P2P lending," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    24. Ling Peng & Geng Cui & Ziru Bao & Shuman Liu, 2022. "Speaking the same language: the power of words in crowdfunding success and failure," Marketing Letters, Springer, vol. 33(2), pages 311-323, June.
    25. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
    26. Wang, Haining & Cheng, Zhiming & Zhe Wang, Ben & Chen, Yuanyuan, 2021. "Childhood left-behind experience and labour market outcomes in China," Journal of Business Research, Elsevier, vol. 132(C), pages 196-207.
    27. George Loewenstein & Cass R. Sunstein & Russell Golman, 2014. "Disclosure: Psychology Changes Everything," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 391-419, August.
    28. Huang, Jin & Sena, Vania & Li, Jun & Ozdemir, Sena, 2021. "Message framing in P2P lending relationships," Journal of Business Research, Elsevier, vol. 122(C), pages 761-773.
    29. Huang, Wenli & Qian, Yanhong & Xu, Nanyan, 2020. "The signaling effects of education in the online lending market: Evidence from China," Economic Modelling, Elsevier, vol. 92(C), pages 268-276.
    30. Syavash Nobarany & Kellogg S. Booth, 2015. "Use of politeness strategies in signed open peer review," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 66(5), pages 1048-1064, May.
    31. Gonzalez, Laura & Loureiro, Yuliya Komarova, 2014. "When can a photo increase credit? The impact of lender and borrower profiles on online peer-to-peer loans," Journal of Behavioral and Experimental Finance, Elsevier, vol. 2(C), pages 44-58.
    32. Jefferson Duarte & Stephan Siegel & Lance Young, 2012. "Trust and Credit: The Role of Appearance in Peer-to-peer Lending," The Review of Financial Studies, Society for Financial Studies, vol. 25(8), pages 2455-2484.
    33. Sonenshein, Scott & Herzenstein, Michal & Dholakia, Utpal M., 2011. "How accounts shape lending decisions through fostering perceived trustworthiness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 115(1), pages 69-84, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Jin & Sena, Vania & Li, Jun & Ozdemir, Sena, 2021. "Message framing in P2P lending relationships," Journal of Business Research, Elsevier, vol. 122(C), pages 761-773.
    2. Davaadorj, Zagdbazar & Enkhtaivan, Bolortuya & Lu, Wenling, 2024. "The role of job titles in online peer-to-peer lending: An empirical investigation on skilled borrowers," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    3. Qun Chen & Ji-Wen Li & Jian-Guo Liu & Jing-Ti Han & Yun Shi & Xun-Hua Guo, 2021. "Borrower Learning Effects: Do Prior Experiences Promote Continuous Successes in Peer-to-Peer Lending?," Information Systems Frontiers, Springer, vol. 23(4), pages 963-986, August.
    4. Qun Chen & Ji-Wen Li & Jian-Guo Liu & Jing-Ti Han & Yun Shi & Xun-Hua Guo, 0. "Borrower Learning Effects: Do Prior Experiences Promote Continuous Successes in Peer-to-Peer Lending?," Information Systems Frontiers, Springer, vol. 0, pages 1-24.
    5. Pankaj Kumar Maskara & Emre Kuvvet & Gengxuan Chen, 2021. "The role of P2P platforms in enhancing financial inclusion in the United States: An analysis of peer‐to‐peer lending across the rural–urban divide," Financial Management, Financial Management Association International, vol. 50(3), pages 747-774, September.
    6. Johan, Sofia & Zhang, Yelin, 2020. "Quality revealing versus overstating in equity crowdfunding," Journal of Corporate Finance, Elsevier, vol. 65(C).
    7. Wang, Chao & Wang, Junbo & Wu, Chunchi & Zhang, Yue, 2023. "Voluntary disclosure in P2P lending: Information or hyperbole?," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    8. Cai, Wanxiang & Polzin, Friedemann & Stam, Erik, 2021. "Crowdfunding and social capital: A systematic review using a dynamic perspective," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    9. Kgoroeadira, Reabetswe & Burke, Andrew & Di Pietro, Francesca & van Stel, André, 2023. "Determinants of firms’ default on unsecured loans in the P2P crowdfunding market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    10. Gregor Dorfleitner & Eva-Maria Oswald & Rongxin Zhang, 2021. "From Credit Risk to Social Impact: On the Funding Determinants in Interest-Free Peer-to-Peer Lending," Journal of Business Ethics, Springer, vol. 170(2), pages 375-400, May.
    11. Li, Jianwen & Hu, Jinyan, 2019. "Does university reputation matter? Evidence from peer-to-peer lending," Finance Research Letters, Elsevier, vol. 31(C), pages 66-77.
    12. Li, Jianwen & Zhang, Bo & Jiang, Mingming & Hu, Jinyan, 2023. "Homophilous intensity in the online lending market: Bidding behavior and economic effects," Journal of Banking & Finance, Elsevier, vol. 152(C).
    13. Liu, Yi & Yang, Menglong & Wang, Yudong & Li, Yongshan & Xiong, Tiancheng & Li, Anzhe, 2022. "Applying machine learning algorithms to predict default probability in the online credit market: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 79(C).
    14. Serena Gallo, 2021. "Fintech platforms: Lax or careful borrowers’ screening?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-33, December.
    15. Andreas Hoegen & Dennis M. Steininger & Daniel Veit, 2018. "How do investors decide? An interdisciplinary review of decision-making in crowdfunding," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(3), pages 339-365, August.
    16. Ding, Jie & Huang, Jinbo & Li, Yong & Meng, Meichen, 2019. "Is there an effective reputation mechanism in peer-to-peer lending? Evidence from China," Finance Research Letters, Elsevier, vol. 30(C), pages 208-215.
    17. Jeffrey A. Chandler & Jacob A. Waddingham & Marcus T. Wolfe, 2024. "Virtue Signaling in the Sharing Economy: The Effect of Airbnb Entrepreneurs’ Virtue Language on Airbnb Price Premiums," Entrepreneurship Theory and Practice, , vol. 48(4), pages 1009-1036, July.
    18. Dongwoo Kim, 2023. "Can investors’ collective decision-making evolve? Evidence from peer-to-peer lending markets," Electronic Commerce Research, Springer, vol. 23(2), pages 1323-1358, June.
    19. Samuel Ribeiro-Navarrete & Juan Piñeiro-Chousa & M. Ángeles López-Cabarcos & Daniel Palacios-Marqués, 2022. "Crowdlending: mapping the core literature and research frontiers," Review of Managerial Science, Springer, vol. 16(8), pages 2381-2411, November.
    20. Wang, Yao & Drabek, Zdenek & Wang, Zhengwei, 2022. "The role of social and psychological related soft information in credit analysis: Evidence from a Fintech Company," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:171:y:2024:i:c:s0148296323007531. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.