Towards Repayment Prediction in Peer-to-Peer Social Lending Using Deep Learning

Abstract

Peer-to-Peer (P2P) lending transactions take place by the lenders choosing a borrower and lending money. It is important to predict whether a borrower can repay because the lenders must bear the credit risk when the borrower defaults, but it is difficult to design feature extractors with very complex information about borrowers and loan products. In this paper, we present an architecture of deep convolutional neural network (CNN) for predicting the repayment in P2P social lending to extract features automatically and improve the performance. CNN is a deep learning model for classifying complex data, which extracts discriminative features automatically by convolution operation on lending data. We classify the borrower’s loan status by capturing the robust features and learning the patterns. Experimental results with 5-fold cross-validation show that our method automatically extracts complex features and is effective in repayment prediction on Lending Club data. In comparison with other machine learning methods, the standard CNN has achieved the highest performance with 75.86%. Exploiting various CNN models such as Inception, ResNet, and Inception-ResNet results in the state-of-the-art performance of 77.78%. We also demonstrate that the features extracted by our model are better performed by projecting the samples into the feature space.