Measuring Applicant Quality to Detect Discrimination in Peer-to-Peer Lending

27 Pages Posted: 10 Feb 2017

See all articles by Georg Weizsacker

Georg Weizsacker

Humboldt University Berlin; DIW Berlin

Christian Zankiewicz

German Institute for Economic Research (DIW Berlin)

Date Written: February 8, 2017

Abstract

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

Weizsacker, Georg and Zankiewicz, Christian, Measuring Applicant Quality to Detect Discrimination in Peer-to-Peer Lending (February 8, 2017). Available at SSRN: https://ssrn.com/abstract=2914528 or http://dx.doi.org/10.2139/ssrn.2914528

Georg Weizsacker (Contact Author)

Humboldt University Berlin ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

DIW Berlin

Mohrenstr. 58
Berlin
Germany

Christian Zankiewicz

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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