Online peer-to-peer (P2P) lending is an innovative way of lending, which enables borrowers fetch money from individual lenders online rather than through traditional financial institutions. Using data from Prosper, which is the largest P2P loan platform in the United States, many researchers have found that there is a herding behavior in P2P lending and as opinions vary, the rationality of it is uncertain. We study herding behavior in P2P lending in China. Data is based on PPDai, which is China’s largest P2P lending platform. To elaborate the effect of herding, we define a herding index which describes the extent of herding rather than simple bidding numbers as many researchers do. Based on some limitation of current research, we extend our model and empirically test the existence of herding and the rationality of it. The research enriches the study of herding in P2P lending. We divide herding behavior into two aspects, which is beneficial to deep understand the herding and elaborately express the extent of herding, which benefit the examination of the rationality of it.
P2P lending, herding, PPDai, herding index, rationality.
The authors are with the School of Information , Central University of Finance and Economics, Beijing, China (e-mail: email@example.com, firstname.lastname@example.org).
Xiangyu Wang and Yan Tu, "
The Existence of Herding in P2P Lending and the Rationality of It - An Empirical Study from China," Journal of Economics, Business and Management vol. 4, no. 11, pp.