Measuring Applicant Quality to Detect Discrimination in Peer-to-Peer Lending
27 Pages Posted: 10 Feb 2017
Date Written: February 8, 2017
We measure the quality of applications for online peer-to-peer lending in Germany and relate it to gender discrimination. The data context allows summarizing application quality as a single numeric measure, the expected internal rate of return. The measure serves as a control variable and is interacted with the applicants' gender. We find that women enjoy higher funding rates than men, mainly because they are less punished when they offer a low application quality. The evidence is consistent with the hypothesis that the predominantly male lenders have a less precise understanding of women's applications than of men's applications.
Keywords: Gender discrimination, household finance, irrational beliefs
JEL Classification: D14, D84
Suggested Citation: Suggested Citation