The DOI matches its Crossref record; 52 of the 52 references it cites were found in a registry or an index.
Rational Herding in Microloan Markets
Open accessAbstract
Microloan markets allow individual borrowers to raise funding from multiple individual lenders. We use a unique panel data set that tracks the funding dynamics of borrower listings on Prosper.com, the largest microloan market in the United States. We find evidence of rational herding among lenders. Well-funded borrower listings tend to attract more funding after we control for unobserved listing heterogeneity and payoff externalities. Moreover, instead of passively mimicking their peers (irrational herding), lenders engage in active observational learning (rational herding); they infer the creditworthiness of borrowers by observing peer lending decisions and use publicly observable borrower characteristics to moderate their inferences. Counterintuitively, obvious defects (e.g., poor credit grades) amplify a listing's herding momentum, as lenders infer superior creditworthiness to justify the herd. Similarly, favorable borrower characteristics (e.g., friend endorsements) weaken the herding effect, as lenders attribute herding to these observable merits. Follow-up analysis shows that rational herding beats irrational herding in predicting loan performance. This paper was accepted by Pradeep Chintagunta, marketing.
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Bollaert, H., Lopez-de-Silanes, F., & Schwienbacher, A. (2021) · Journal of Corporate Finance · doi:10.1016/j.jcorpfin.2021.101941 · Cited by 521
How do firms make money selling digital goods online?
Lambrecht, A., Goldfarb, A., Bonatti, A., Ghose, A., Goldstein, D. G., Lewis, R., Rao, A., Sahni, N., & Yao, S. (2014) · Marketing Letters · doi:10.1007/s11002-014-9310-5 · Cited by 167
Financial inclusion and fintech: a state-of-the-art systematic literature review
Ha, D., Le, P., & Nguyen, D. K. (2025) · Financial Innovation · doi:10.1186/s40854-024-00741-0 · Cited by 110
“The microfinance sector can provide smaller loans to economically disadvantaged individuals and those residing in rural areas who may find traditional banking inaccessible because of a lack of formal identification (Zhang and Liu 2012; Dodgson et al. 2015).”
Metadata
- Authors
- Zhang, J., & Liu, P.
- Venue
- Management Science
- Published
- 2012-05
- Volume
- 58
- Issue
- 5
- Pages
- 892-912
- ISSN
- 0025-1909 (ISSN-L)
- 1526-5501
- OpenAlex
- W1980573833
- Cited by
- 853
- References
- 52
- FWCI
- 75.50
- Type
- journal article
- Language
- en
- Open access
- green
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