Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148902
Authors: 
Polena, Michal
Regner, Tobias
Year of Publication: 
2016
Series/Report no.: 
Jena Economic Research Papers 2016-023
Abstract: 
We study the determinants of borrowers' default in P2P lending with a new data set consisting of 70,673 loan observations from Lending Club. Previous research identified a number of default determining variables but did not distinguish between different loan risk levels. We define four loan risk classes and test the significance of the default determining variables within each loan risk class. Our findings suggest that the significance of most variables depends on the loan risk class. Only few variables are consistently significant across all risk classes. The debt-to-income ratio, inquiries in the past 6 months and a loan intended for a small business are positively correlated with the default rate. Annual income and credit card as loan purpose are negatively correlated.
Subjects: 
crowdfunding
peer-to-peer lending
P2P
credit grade
FICO score
default risk
JEL: 
D14
E41
G23
Document Type: 
Working Paper

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