Next Article in Journal
Homophily and Social Norms in Experimental Network Formation Games
Previous Article in Journal
Can I Rely on You?
Previous Article in Special Issue
When Is Green Too Rosy? Evidence from a Laboratory Market Experiment on Green Goods and Externalities
Article Menu

Export Article

Open AccessArticle
Games 2018, 9(4), 82; https://doi.org/10.3390/g9040082

Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class

1
Czechoslovak Commercial Bank, 150 57 Prague, Czech Republic
2
University of Jena, 07743 Jena, Germany
*
Author to whom correspondence should be addressed.
Received: 31 August 2018 / Revised: 1 October 2018 / Accepted: 3 October 2018 / Published: 12 October 2018
(This article belongs to the Special Issue Public Good Games)
Full-Text   |   PDF [865 KB, uploaded 12 October 2018]

Abstract

We study the determinants of borrowers’ default in P2P lending with a new data set consisting of 70,673 loan observations from the 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 a few variables are consistently significant across all risk classes. The debt-to-income ratio, inquiries in the past six 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. View Full-Text
Keywords: crowdfunding; peer-to-peer lending; P2P; credit grade; FICO score; default risk crowdfunding; peer-to-peer lending; P2P; credit grade; FICO score; default risk
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Polena, M.; Regner, T. Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class. Games 2018, 9, 82.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Games EISSN 2073-4336 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top