Abstract
Small and micro enterprises (SMEs) play a significant role in the market economy. While online lending has brought financial inclusion for SMEs’ borrowers, it has also increased the default risk, which restricts the normative development of online lending. To explore the impact of the reputation mechanism on borrowers’ default behavior, this paper provides a theoretical model of asymmetric information dynamic games under the online lending mechanism and an empirical study, which takes the number of bidders that reflects the investors’ participation as a proxy variable for the reputation effect factor. The theoretical model showed the borrowers’ default behavior is effectively restrained by the increase in the reputation effect factor in the reputation mechanism, and the empirical study found that an increase in the number of bidders can significantly reduce the risk of borrowers’ default, which verifies the conclusion of the theoretical model.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
