On Education Level and Terms in Obtaining P2P Funding: New Evidence from China
33 Pages Posted: 18 Apr 2016 Last revised: 11 Feb 2017
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
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