Quotation Mild, Andreas, Wöckl, Jürgen, Waitz, Martin. 2015. How low can you go? - Overcoming lender inability to set proper interest rates on unsecured peer-to-peer lending markets. Journal of Business Research 68, 1291-1305.


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Abstract

The lending of money is traditionally handled by banking institutions. The internet has enabled new forms of credit businesses, challenging the classical bank loan. Peer-to-peer lending markets bring together noninstitutional borrowers and lenders. In a typical lending market, borrowers have to present their projects, and lenders decide under what terms they are prepared to provide the requested capital. As many loans are not secured by collateral, the assessment of the creditworthiness of the borrower is the most important task. Wedemonstrate that investors fail to transform the available information into proper market activities in the absence of hard, quantifiable banking data, threatening the sustainability of this new lending concept. We present a decision-support-tool to support users in the estimation of risk of default. Based on an a-posteriori analysis, we demonstrate that our system is able to price the risk of default adequately and is able to improve investors' return significantly.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Business Research
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, STRAT-B, VW-D, WH-B
Language English
Title How low can you go? - Overcoming lender inability to set proper interest rates on unsecured peer-to-peer lending markets
Volume 68
Year 2015
Page from 1291
Page to 1305
Reviewed? Y
DOI http://dx.doi.org/10.1016/j.jbusres.2014.11.021

Associations

People
Mild, Andreas (Details)
Wöckl, Jürgen (Details)
Waitz, Martin (Details)
Organization
Produktionsmanagement (Taudes) (Details)
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