Abstract
By using data from a natural experiment, the 2015 Ezubao scandal in China, we show that as a consequence of negative news about a P2P financial platform, all players operating in a different platform (borrowers, lenders, and the platform itself) are worse-off due to information contagion. Moreover, we present evidence that high-income individuals and those that contracted loans for investment purposes are disproportionately affected by contagion from negative news.
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