The Impact Of Credit Rate And Credit Score On Investors' Decision-Making

In 2007,the first P2P lending platform was established in China.P2P lending has advantages of low threshold and convenience so that it has developed very fast since 2007.But at the same time,the default of borrowers and the escape of platforms emerge in endlessly,which hurts investors' confidence badly and damages investors'interest.So that investors do not trust P2P platforms like before.Information asymmetry maybe one important reason which can explain these situations.To relieve information asymmetry in P2P lending,enhance the trust of investors and help them make investment decisions rationally,many P2P platforms start to assess borrowers'credit risk and introduce the index of borrowers'credit rate and credit score.These indicators become important factors that investors would take into account when they make investment decisions.So that what is the impacts of credit rate and credit score on investors' decision-making,and whether the credit rating methods are effective,are noteworthy questions.This paper collects literatures about P2P lending,investors' behavior and summarizes them,and then analyzes theoretical basis of investors' decision-making and credit rating.We also analyze current situation and existing problems of P2P lending and Renrendai platform.On this basis,we hypothesize how credit rate and credit score impact investors' decision-making,hypothesize the effectiveness of credit rating.We use web crawler technology to get data from Renrendai platform from October 2010 to February 2018,we screen these data and then we get 457877 valid data.We use methods of data analysis,descriptive statistical analysis and OLS regression analysis and then we get conclusions:(1)There is an optimal credit rate when investors make investment decisions,there is a relationship between credit rate and investors'decision-making like inverted U.(2)Investment willingness shows positive correlation with credit score.(3)Credit rating from renrendai platform is not effective enough.So that this paper reaches a decision that investors pay enough attention to the indicators of credit rate and credit score but credit rating methods of renrendai is not effective enough to reveal the default risk of borrowers.This paper studies relationship between credit score and investment willingness creatively,and this study will help perfect the research of investors decision-making in P2P lending.Our conclusions could also act as a reference for investors,platforms and supervisors.According to these conclusions,investors could make investment decisions rationally,platforms could perfect the credit rating methods.