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Evaluating borrowers' default risk with a spatial probit model reflecting the distance in their relational network

Jong Wook Lee, So Young Sohn, Elisa Ughetto
2021 PLoS ONE  
We apply this method to peer-to-peer Lending Club Loan data.  ...  This information is then utilized in a proposed spatial probit model to reflect the different degree of borrowers' relation on the default prediction of loan applicant.  ...  [23] used a topic model to extract representative features from descriptive text concerning loans.  ... 
doi:10.1371/journal.pone.0261737 pmid:34972129 pmcid:PMC8719753 fatcat:2gdvwypgtzbvtbsi4j5kfuhps4

Credit Scoring Using Machine Learning by Combing Social Network Information: Evidence from Peer-to-Peer Lending

Beibei Niu, Jinzheng Ren, Xiaotao Li
2019 Information  
The aim of this study is to test the reliability of social network information in predicting loan default.  ...  We extract borrowers' social network information from mobile phones and then use logistic regression to test the relationship between social network information and loan default.  ...  The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.  ... 
doi:10.3390/info10120397 fatcat:64tbdpl5nvfy7kvjeo2mpkvsbu

A credit risk assessment model of borrowers in P2P lending based on BP neural network

Zhengwei Ma, Wenjia Hou, Dan Zhang, Roberto Savona
2021 PLoS ONE  
This paper first analyzes the basic development of China's P2P online lending and the credit risks of borrowers in the industry.  ...  Peer-to-Peer (P2P) lending provides convenient and efficient financing channels for small and medium-sized enterprises and individuals, and therefore it has developed rapidly since entering the market.  ...  Jiang, etc. (2017) proposed a prediction method that combines traditional credit assessment features with 'soft features' extracted from descriptive loan information.  ... 
doi:10.1371/journal.pone.0255216 pmid:34343180 pmcid:PMC8330911 fatcat:vebq475qyjg5zoxqsdhw4gy3mi

Description-text related soft information in peer-to-peer lending – Evidence from two leading European platforms

Gregor Dorfleitner, Christopher Priberny, Stephanie Schuster, Johannes Stoiber, Martina Weber, Ivan de Castro, Julia Kammler
2016 Journal of Banking & Finance  
We examine the relation of soft factors that are derived from the description texts to the probability of successful funding and to the default probability in peer-to-peer lending for two leading European  ...  Conditional on being funded, text-related factors hardly predict default probabilities in peer-to-peer lending for both platforms.  ...  Conclusion In this article we analyze the role that soft information derived from description texts plays in the funding decision and in predicting the default probability in P2P lending.  ... 
doi:10.1016/j.jbankfin.2015.11.009 fatcat:6f6eztzs55e2zkoplpvgcfzxw4

Screening in New Credit Markets: Can Individual Lenders Infer Borrower Creditworthiness in Peer-to-Peer Lending?

Rajkamal Iyer, Asim Ijaz Khwaja, Erzo F. P. Luttmer, Kelly Shue
2009 Social Science Research Network  
New online peer-to-peer lending markets offer opportunities to examine lending models that primarily cater to small borrowers and that generate more types of information on which to screen.  ...  This paper evaluates screening in a peer-to-peer market where lenders observe both standard financial information and soft, or nonstandard, information about borrower quality.  ...  Furthermore, in Europe and Asia, online peer-to-peer lending markets are on the rise. 4 In this paper, we exploit unique data from Prosper.com, an online peer-to-peer lending marketplace that was founded  ... 
doi:10.2139/ssrn.1570115 fatcat:v5ftfdybrvd7tjszl7zk4du5ee

Screening Peers Softly: Inferring the Quality of Small Borrowers

Rajkamal Iyer, Asim Ijaz Khwaja, Erzo F. P. Luttmer, Kelly Shue
2016 Management science  
New online peerto-peer lending markets offer opportunities to examine lending models that primarily cater to small borrowers and that generate more types of information on which to screen.  ...  This paper evaluates screening in a peer-to-peer market where lenders observe both standard financial information and soft, or nonstandard, information about borrower quality.  ...  Furthermore, in Europe and Asia, online peer-to-peer lending markets are on the rise. 4 In this paper, we exploit unique data from Prosper.com, an online peer-to-peer lending marketplace that was founded  ... 
doi:10.1287/mnsc.2015.2181 fatcat:kpan3toqxzdaxpfj7muereiloa

How Does the Urgency of Borrowing in Text Messages Affect Loan Defaults? Evidence from P2P Loans in China

Hong Liu, Mingkang Yuan, Meiling Zhou, Chi-Hua Chen
2021 Security and Communication Networks  
In short, fully excavating loan description information is helpful in reducing the risk of loan default.  ...  To explore the borrowing described in text information and its relationship with default behavior, this article selects credits from April 2014 to October 2016 as the repayment period and studies default  ...  Acknowledgments e work was supported by the National Natural Science Foundation of China (grant no. 71701166), Soft Science Program of Chengdu Science and Technology Bureau (2020-RK00-00168-ZF), Fundamental  ... 
doi:10.1155/2021/4060676 fatcat:az3xr5x5xnehlik2rqdrnu34qi

Borrower-lender Information Fusion for P2P Lending: A Nonparametric Approach

Yanhong Guo, Shuai Jiang, Feiting Chen, Yaocong Li, Chunyu Luo
2019 Ingénierie des Systèmes d'Information  
As known to us, tremendous efforts have been made to exploit information from borrower's credit for loan evaluation in P2P lending, but seldom researches have explored information from investors and borrowers  ...  To this end, we propose an integrated loan evaluation model that exploits and fuses multi-source information from both the borrower and the investor for improving investment decisions in P2P lending.  ...  The authors would like to thank the anonymous reviewers for their valuable comments and suggestions to improve the quality of the paper.  ... 
doi:10.18280/isi.240307 fatcat:jmqpzjmycvaw3cwvygnw323j6i

Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending

Adair Morse
2015 Annual Review of Financial Economics  
Can peer-to-peer lending (P2P) crowdfunding disintermediate and mitigate information frictions in lending such that choices and outcomes for at least some borrowers and investors are improved?  ...  On the borrower side, evidence suggests that proximate knowledge (direct or inferred) unearths soft information, and by implication, P2P should be able to offer pricing and/or access benefits to potential  ...  An approach not yet explored in P2P to my knowledge is via deduction, working backwards from what informs success in raising funds and in predicting low default.  ... 
doi:10.1146/annurev-financial-111914-041939 fatcat:upkltywhynagxf2sdp2a24yio4

Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending

Adair Morse
2015 Social Science Research Network  
Can peer-to-peer lending (P2P) crowdfunding disintermediate and mitigate information frictions in lending such that choices and outcomes for at least some borrowers and investors are improved?  ...  On the borrower side, evidence suggests that proximate knowledge (direct or inferred) unearths soft information, and by implication, P2P should be able to offer pricing and/or access benefits to potential  ...  An approach not yet explored in P2P to my knowledge is via deduction, working backwards from what informs success in raising funds and in predicting low default.  ... 
doi:10.2139/ssrn.2551272 fatcat:gabznispz5fq5kjago7o6b4gh4

Accessing Information Asymmetry in Peer-to-Peer Lending by Default Prediction from Investors' Perspective

Xinyuan Wei, Bo Yu, Yao Liu
2020 Symmetry  
In this paper, we propose an L 1 / 2 -regularized weighted logistic regression model for default prediction of peer-to-peer lending loans from investors' perspective, which can reduce the impact of information  ...  Meanwhile, due to the nature of peer-to-peer lending loans, we add an L 1 / 2 -regularization term to reduce the chance of overfitting.  ...  [9] apply a tex analysis method and latent Dirichlet allocation (LDA) model to extract soft information from text to be combined with hard information.  ... 
doi:10.3390/sym12060935 fatcat:ujucqrsm2bds3g4sap4cenfglm

Application of instance-based entropy fuzzy support vector machine in peer-to-peer lending investment decision

Poongjin Cho, Woojin Chang, Jae Wook Song
2019 IEEE Access  
Loan status prediction is an effective tool for investment decisions in peer-to-peer (P2P) lending market.  ...  Applying the model to the lending club dataset, we determine loans that are predicted to be fully paid.  ...  [10] extracted features from the descriptive loan text with latent Dirichlet allocation (LDA) model and predicted defaults in P2P loan using the soft information; and Zeng et al.  ... 
doi:10.1109/access.2019.2896474 fatcat:xztc7pjypvcjxfnpzixiqlzzkm

The Role of Soft Information in Trust Building: Evidence from Online Social Lending [chapter]

Stefanie Pötzsch, Rainer Böhme
2010 Lecture Notes in Computer Science  
We analyze empirical data of Germany's largest online social lending platform Smava.de to exemplarily study the contribution of unstructured, ambiguous, or unverified information to trust building in online  ...  Lenders generally seem to give more weight to hard information so that disclosing personal data promises little benefit while potentially exposing borrowers to privacy risks.  ...  Part of the research leading to these results has received funding from the European Community's Seventh Framework Programme (FP7/2007-2013) under grant agreement No. 216483.  ... 
doi:10.1007/978-3-642-13869-0_28 fatcat:epgyck6635auxpd2iagnhtgbzq

The information value of online social networks: Lessons from peer-to-peer lending

Seth Freedman, Ginger Zhe Jin
2017 International Journal of Industrial Organization  
We examine whether social networks facilitate online markets using data from a leading peer-to-peer lending website.  ...  We find that borrowers with social ties are consistently more likely to have their loans funded and receive lower interest rates; however, most borrowers with social ties do not perform better ex post.  ...  Using transaction level data from Prosper.com -the first and by far the largest peer-to-peer (p2p) consumer lending platform in the US 1 -this paper examines whether or not informal online social networks  ... 
doi:10.1016/j.ijindorg.2016.09.002 fatcat:dioylvl5hzggbbk26ipj3xqhgq

Rethinking SME default prediction: a systematic literature review and future perspectives

Francesco Ciampi, Alessandro Giannozzi, Giacomo Marzi, Edward I. Altman
2021 Scientometrics  
a systematic literature review, based on a statistical, bibliometric analysis, of over 100 peer-reviewed articles published on SME default prediction modelling over a 34-year period, 1986 to 2019.  ...  Motivated by the enormous toll on SMEs caused by the 2007–2009 global financial crisis as well as the recent COVID-19 crisis and the consequent need to develop new SME default predictors, this paper provides  ...  extracted from Argenti's model.  ... 
doi:10.1007/s11192-020-03856-0 pmid:33531720 pmcid:PMC7844786 fatcat:myessip4vvajphscddamtn53xi
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