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On the effects of misspellings on lender demand in peer-to-peer lending

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  • Randall J. Hucks

Abstract

I analyse borrower submitted free-form descriptions of anonymous peer-to-peer (P2P) loans from the US-based P2P lending website LendingClub.com and find that borrower misspellings predict lower funding rates, and longer times to fund. Prior empirical studies suggest that poor spelling in peer-to-peer lending disclosures is used as a substitute for hard credit information; my findings show that poor spelling is perceived as a signal of the communicator's quality regardless of the quality of the information environment. Further, I demonstrate that the negative relation between misspelling and lender demand holds generally, regardless of borrower or loan characteristics, confirming prior experimental research.

Suggested Citation

  • Randall J. Hucks, 2023. "On the effects of misspellings on lender demand in peer-to-peer lending," International Journal of Electronic Finance, Inderscience Enterprises Ltd, vol. 12(4), pages 374-402.
    • Handle: RePEc:ids:ijelfi:v:12:y:2023:i:4:p:374-402
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