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P2P-Platform Lenders Can Make Irrational Decisions: Open Research Seminar
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The NBU hosted an open research seminar on 26 December 2018 in which Oleksandr Talavera, a Professor of Finance at the Swansea
University School of Management, UK, gave a talk about recent developments in
P2P-lending research. Oleksandr Talavera presented the preliminary results of his
research on specific features of on-line P2P lending platforms. As technology evolves, these platforms are
gaining in popularity throughout the world and in Ukraine in particular. At the
same time, these platforms provide big data that enable studying borrowers’ and
lenders’ behavior at the micro level. Oleksandr Talavera employs these data to explore the
consequences of misreporting phenomenon, to investigate the likelihood that an
applicant will submit a new loan request despite previous rejections, and to
gain more insights on herding behavior in p2p lending. The research suggests that modern-day P2P platforms may be in need of
substantial improvements to reduce information asymmetry. In his studies, the author makes the following conclusions: ·
Misreporting
income by means of rounding may play a role in loans’ delinquency and that this
could expose investors to extra risk. ·
Repeat
applicants are prepared to pay higher interest rates. In other words,
discouraged borrowers are put off by the fact that they have to offer higher
interest rates as this may not be rational. ·
P2P-platform-based
lenders sometimes irrationally mimic others' choices when there is automatic
bidding and when the number of investors outweigh the
number of worthy borrowers. For more on the impact of asymmetric information, the discouraged
borrowers, and the herding behavior in the P2P-lending market, see additional
materials. |