Abstract
Online peer-to-peer (P2P) lending is a form of online microloan market that enables borrowers to reach individual lenders through online lending platforms rather than through traditional financial institutions such as banks. We investigate the lenders’ rationality via the perspective of herding behavior in this study. Based on the data from PPdai.com, the largest online P2P lending market in China, we found that herding phenomenon is salient in P2P lending market in China, and such herding is dominated by irrationality. Such result is quite different from what obtained based on the data from the Prosper.com in USA. We attribute this difference to the cultural and economical factors.
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