Investors' Decision Making In Peer-to-peer Lending Market

Peer-to-Peer Lending is an information intermediary between individual borrowers and individual investors,which provides a supplement for traditional financial market lending activities mediated by banks.For investors,the decentralization of Peer-to-Peer Lending provides new investment options for small-capitalized investors.Lowthreshold access leads to uneven investment level and risk decision-making ability.In the direct lending market,investors' behavior can affect the risk and financing efficiency of the whole market to a great extent.Therefore,the risk decision-making ability of Peer-to-Peer Lending investors is an important prerequisite for the stability of the Peer-to-Peer Lending market.Under this background,it is essential to study the risk decision-making of Peer-to-Peer network lending investors.In this paper,we use crawler program to capture the transaction data of "Renrendai" network lending platform.In the first stage,we establish a logistic model to predict the borrower's default risk using the publicly available information,so as to simulate the risk identification process of investors.In the second stage,we use the nominal interest rate,default risk and their interaction to study the role of them in investment decisionmaking.The conclusion is: firstly,due to the repayment mechanism of Renrendai,investors prefer high-yield and high-risk lists,and there exists deviations.Secondly,considering the interaction between default risk and nominal interest rate,with the increase of default risk,the impact of nominal interest rate on investment decisionmaking is weakened,which explain the existence of investors' balancing behavior.Thirdly,Investors are not totally irrational.There is an acceptable level of interest rate in the minds of investors.When the interest rate exceeds the psychological expectations of investors,investors show risk aversion.According to the empirical research,the following suggestions are put forward to the participants of Peer-to-Peer Lending: investors should enhance their investment ability and measure the risk of borrowers carefully.Peer-to-Peer Lending platform should improve the credit evaluation system,effectively reveal the risks of borrowers to provide investors with correct guidance.