Abstract
Background: Online lending has developed rapidly in China in recent years, into a typical Internet financial model. China’s online lending related issues have received widespread attention from scholars. Methods: This study used 396,634 order data-points (935,037 original order data-points) from the Renren Loan website since its inception in January 2017. We used ordinary least squares (OLS) regression to study the problem of geographical discrimination in online lending in China, and we conducted two robust tests. Results: Studies have shown that significant geographical discrimination exists in China’s online lending market. From the perspective of the lender, different investment intentions exist for borrowers from various regions, thereby leading to variations in the success rates of loans. From the perspective of the borrower, the belief exists that borrowers from different regions will have varying interest rates because of the effect of geographical discrimination. Conclusion: We believe that geographical discrimination is due to the effects of the economic, financial, educational, and ethnic conditions of the borrower’s location on willingness to invest and the success rate of borrowing. However, borrowers’ self-discrimination is primarily related to economic and ethnic differences among provinces.
Highlights
Internet lending is a financial model that has emerged in China in recent years along with the development of Internet finance (Chen et al 2013)
The results show that loan data of “Renren Dai”, one of the earliest peer-to-peer (P2P) network lending platforms in China, to significant geographical discrimination exists in the online lending market in China
On the basis of the empirical results of geographical discrimination from the perspective of borrowers and lenders, significant differences exist in the success rates of borrowing among banks and the interest rate of borrowing; that is, significant geographical discrimination exists in online lending
Summary
We believe that geographical discrimination is due to the effects of the economic, financial, educational, and ethnic conditions of the borrower’s location on willingness to invest and the success rate of borrowing.
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