On Education Level and Terms in Obtaining P2P Funding: New Evidence from China

33 Pages Posted: 18 Apr 2016 Last revised: 11 Feb 2017

See all articles by Junhui Xu

Junhui Xu

Guangzhou University

Jitka Hilliard

Auburn University

James R. Barth

Auburn University; Milken Institute

Date Written: April 16, 2016

Abstract

This paper examines the role of education level in China’s fast-growing peer-to-peer (P2P) lending market. The level of education, as part of a borrower’s profile, is an important yet relatively neglected factor that can affect both the demand and supply of credit in an increasingly more technologically-oriented marketplace. With this in mind, we test the relationships between borrowers’ education levels and interest rates, loan amounts, and loan maturities in China’s P2P marketplace. Based on more than 10,000 transactions from Renrendai.com and, controlling for a variety of other factors, we find that individuals with higher education levels obtain lower interest rates, larger loan amounts and longer maturities.

Keywords: peer-to-peer funding, demand for credit, education, interest rates, credit ratings

JEL Classification: E41, G15

Suggested Citation

Xu, Junhui and Hilliard, Jitka and Barth, James R., On Education Level and Terms in Obtaining P2P Funding: New Evidence from China (April 16, 2016). Available at SSRN: https://ssrn.com/abstract=2765781 or http://dx.doi.org/10.2139/ssrn.2765781

Junhui Xu

Guangzhou University ( email )

Guangzhou Higher Education Mega Center
Waihuanxi Road 230
Guangzhou, Guangdong 510006
China

Jitka Hilliard (Contact Author)

Auburn University ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States
334-844-5520 (Phone)

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

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