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.

Presentation

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