Macroeconomic determinants of loan defaults: evidence from the U.S. peer-to-peer lending market
Article
Article Title | Macroeconomic determinants of loan defaults: evidence from the U.S. peer-to-peer lending market |
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ERA Journal ID | 19591 |
Article Category | Article |
Authors | Nigmonov, Asror (Author), Shams, Syed (Author) and Alam, Khorshed (Author) |
Journal Title | Research in International Business and Finance |
Journal Citation | 59, pp. 1-13 |
Article Number | 101516 |
Number of Pages | 13 |
Year | 2022 |
Place of Publication | United States |
ISSN | 0275-5319 |
1878-3384 | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.ribaf.2021.101516 |
Web Address (URL) | https://www.sciencedirect.com/science/article/pii/S0275531921001379?via%3Dihub |
Abstract | The study documented in this paper utilises a probit regression analysis to empirically investigate the key macroeconomic factors that influence default risk in the peer-to-peer (P2P) lending market. By aggregating the United States (U.S.) state-level data with LendingClub's loan book covering the period from 2008 to 2019, this study examines multiple factors related to default risks of loans issued by P2P lending platforms. Our results show that a higher interest rate and inflation increase the probability of default in the P2P lending market. We also find that the impact of interest rate on the probability of default is significantly higher for loans with lower ratings. By paving the way to future market best practices, the study's outcomes apply to P2P lending platforms and investors in their default estimation of loans. |
Keywords | crowdfunding; default; marketplace lending; peer-to-peer lending; United States |
ANZSRC Field of Research 2020 | 380112. Macroeconomics (incl. monetary and fiscal theory) |
380204. Panel data analysis | |
380107. Financial economics | |
Public Notes | Files associated with this item cannot be displayed due to copyright restrictions. |
Byline Affiliations | University of New South Wales |
School of Business | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q69zw/macroeconomic-determinants-of-loan-defaults-evidence-from-the-u-s-peer-to-peer-lending-market
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