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How low can you go? — Overcoming the inability of lenders to set proper interest rates on unsecured peer-to-peer lending markets

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  • Mild, Andreas
  • Waitz, Martin
  • Wöckl, Jürgen

Abstract

The lending of money is traditionally handled by banking institutions. The internet has enabled new forms of credit businesses, challenging the classical bank loan. Peer-to-peer lending markets bring together noninstitutional borrowers and lenders. In a typical lending market, borrowers have to present their projects, and lenders decide under what terms they are prepared to provide the requested capital. As many loans are not secured by collateral, the assessment of the creditworthiness of the borrower is the most important task.

Suggested Citation

  • Mild, Andreas & Waitz, Martin & Wöckl, Jürgen, 2015. "How low can you go? — Overcoming the inability of lenders to set proper interest rates on unsecured peer-to-peer lending markets," Journal of Business Research, Elsevier, vol. 68(6), pages 1291-1305.
    • Handle: RePEc:eee:jbrese:v:68:y:2015:i:6:p:1291-1305
    DOI: 10.1016/j.jbusres.2014.11.021
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    References listed on IDEAS

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    4. repec:bla:econom:v:54:y:1987:i:215:p:289-98 is not listed on IDEAS
    5. 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.
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