Abstract
ABSTRACT Most of peer-to-peer (P2P) online borrowers are small business managers. Learning behavior of them is under-analyzed in the literature of P2P online lending. Using a large sample from one of the China’s largest online P2P lending marketplaces- renrendai.com, we examine whether a borrower in the P2P lending market has a learning behavior when he/she bids interest rates for a loan. We validate the existence of learning behavior in the interest rate bidding, in which they learn from the previous experience and adjust the interest rates downward, so that they can obtain finance at a lower cost. Further analysis shows the heterogeneity across gender and education. We find that female borrowers and highly educated borrowers are more effective in the learning process. Robustness check further supports our hypothesis. Our findings point to the importance of providing financial education for groups of low education level. Managerial implications are discussed.
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