Research On The Influence On Investors' Transaction Behavior By The Online Order Information On P2P Lending Platform

In this paper we use the data of the credit loans on renrendai.com to do the empirical research on the trading behavior influencing factors. We want to know whether the investors in P2 P lending market can identify the borrowers' credit risks and make the right decisions by analyzing the online order information. In this paper, the research can be divided into three parts : First, we discuss the market reaction of investors to the order information to see how the investors assess the risks. Second, we discuss the real default rates of borrowers with different order information. At last, we are going to see whether there are deviations between the investors' prediction and the real default risks. Through the research, we come to the following conclusions.Firstly, we find that in the face of unsecured loan application s, the information have a strong effect on investors' willingness to lend. It is the main basis when investors making their decisions. The influence of factors including loan elements, credit and historical information is greater. The invest ors assess the borrowers' credit risks and the benefits according to the order information, deciding whether to lend after a comprehensive evaluation. It is worth noting that investors underestimate the value of the education and prefer borrowers with lower education levels. Some of the high-risk borrowers with default records can also get loans by decorating the credit status.Secondly, the personal information cannot reflect the credit risk s well. Only the information such as income, education can predict the credit risks. Variables which belong to loan elements, credit and historical information have significant influence. It is worth noting that the interest rate can't be as a signal of credit risk any more, the variable named “pay-off number” can't reflect the credit risk correctly. For these phenomena, we found three related reasons which are "crowd out" effect caused by guarantee standard, investors' search costs is too high because of the improper retrieval mechanism and the lack of punishment result in the borrowers ' default costs is too low.The empirical results show that although the investors make decisions depend on the order information, there are large deviations between their predict ion and the real default risks. It's not easy for investors to choose the high quality borrowers accurately.Based on the results of the study, we make some suggestions to the P2 P lending platform from three aspects: improving the information service technology, to strengthen the education of investors and improving the supervision of the borrowers.