What does not kill us makes us stronger: the story of repetitive consumer loan applications

Mustafa Caglayan; Oleksandr Talavera; Lin Xiong; Jing Zhang

doi:10.1080/1351847X.2020.1793792

What does not kill us makes us stronger: the story of repetitive consumer loan applications

Mustafa Caglayan, Oleksandr Talavera, Lin Xiong^*, Jing Zhang

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

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Abstract

We investigate borrower and lender behaviours when the borrower has experienced a sequence of failed loan applications. Our analysis is based on half a million observations from an established peer-to-peer (P2P) loan platform in China from 2010 to 2018. We find that borrowers who have better credit scores and who accept to pay higher interest rates are likely to reapply for funds after experiencing an earlier failed attempt. However, women and applicants with more education are discouraged from re-applying compared to their male or less-educated counterparts, respectively. On the funding supply side, lenders strive to fund safe borrowers who have high credit ratings and high income, though not those who offer a high interest rate.

Original language	English
Pages (from-to)	46-65
Number of pages	20
Journal	European Journal of Finance
Volume	28
Issue number	1
Early online date	20 Jul 2020
DOIs	https://doi.org/10.1080/1351847X.2020.1793792
Publication status	Published - 2 Jan 2022

Keywords

China
discouraged borrower
Fintech
loan listing outcomes
Peer-to-peer (P2P) lending

ASJC Scopus subject areas

Economics, Econometrics and Finance (miscellaneous)

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10.1080/1351847X.2020.1793792

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This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 20/7/2020, available online: http://www.tandfonline.com/10.1080/1351847X.2020.1793792
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What does not kill us makes us stronger: the story of repetitive consumer loan applications

Abstract

Keywords

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