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Article

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

AMA Style

Polena M, Regner T. Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class. Games. 2018; 9(4):82. https://doi.org/10.3390/g9040082

Chicago/Turabian Style

Polena, Michal, and Tobias Regner. 2018. "Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class" Games 9, no. 4: 82. https://doi.org/10.3390/g9040082

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