Mass shootings and peer-to-peer lending

Abstract

This paper analyzes the effect of mass shootings on peer-to-peer lending behavior. Using U.S. data from 2014–2018, we implement an event study methodology to exploit the quasi-experimental nature of mass-shooting incidents on local credit markets. Our findings indicate a short-term tightening of local credit conditions (higher interest rates and lower loan amounts) immediately after a mass shooting in affected communities relative to those in non-affected communities. These findings highlight that online credit marketplaces are reactive to random local shocks of violence at the community level and their corresponding public and media attention.