2021/04/12 by Iftekhar Hasan, Qing He, Haitian Lu · 1 citation
Economics, Econometrics and Finance · Business, Management and Accounting · #Microfinance and Financial Inclusion #FinTech, Crowdfunding, Digital Finance #Islamic Finance and Banking Studies
paper · pdf · doi:10.1017/s0022109021000259
Abstract How does social capital affect trust? Evidence from a Chinese peer-to-peer lending platform shows that regional social capital affects the trustee’s trustworthiness and the trustor’s trust propensity. Ceteris paribus, borrowers from regions with higher social capital receive larger bids from individual lenders and have higher funding success, larger loan sizes, and lower default rates, especially for low-quality borrowers. Lenders from regions with higher social capital take higher risks and have higher default rates, especially for inexperienced lenders. Cross-regional transactions are most (least) likely to be realized between parties from regions with high (low) social capital.