Xianyun Chen

Date of Award

2-9-2023

Degree Type

Dissertation/Thesis

Advisor(s)

An Yan

Second Advisor

Zhuo Huang

Third Advisor

Feng Zhao

Abstract

This dissertation builds on the theoretical framework of information asymmetry, signaling theory, and social network, and empirically studies the impact of social network friendship on peer-to-peer lending (P2P). Using the P2P lending data from China, it studies how social network affects the lending willingness in China’s P2P lending. In particular, it examines the effect of social network on the adverse selection in P2P lending in China, and the effect of social network on interest and default rates. It also explores how P2P loans use the advantages in low-cost customer acquisition and fast matching to provide better customer experience and to satisfy the financing demand of retail clients and small and micro enterprises.

The dissertation combines quantitative and qualitative approaches, based on the interviews with 18 interviewers for empirical qualitative analysis and questionnaire survey for quantitative analysis.

Our analysis shows that social network friendship can reduce the information asymmetry between borrowers and lenders and reduce borrowing costs for borrowers. Social network friendship also increases the likelihood of P2P loan, but it has no impact on both interest rate charged by lenders or default rate.

Overall, the results above suggest a positive influence of social network on P2P lending behavior. The dissertation also proposes suggestions for future regulation, with respect to how to regulate P2P platform, how to improve financing access for retail borrowers and small and micro enterprises, and how to promote the sustainable development of P2P lending platform.

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