Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-peer Lending

Journal of Financial and Quantitative Analysis, Forthcoming

61 Pages Posted: 27 Jan 2021

See all articles by Iftekhar Hasan

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Qing He

Renmin University of China

Haitian Lu

Hong Kong Polytechnic University

Multiple version iconThere are 2 versions of this paper

Date Written: November 19, 2020

Abstract

How does social capital affect trust? Evidence from a Chinese peer-to-peer lending platform shows regional social capital affects the trustee’s trustworthiness and the trustor’s trust propensity. Ceteris paribus, borrowers from higher social capital regions receive larger bid from individual lenders, have higher funding success, larger loan size, and lower default rates, especially for low-quality borrowers. Lenders from higher social capital regions take higher risks and have higher default rates, especially for inexperienced lenders. Cross-regional transactions are most (least) likely to be realized between parties from high (low) social capital regions.

Keywords: Social Capital, Trustworthiness, Generalized Trust, Debt Crowdfunding

JEL Classification: Z10, G10, O16

Suggested Citation

Hasan, Iftekhar and He, Qing and Lu, Haitian, Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-peer Lending (November 19, 2020). Journal of Financial and Quantitative Analysis, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3733498

Iftekhar Hasan

Fordham University ( email )

45 COLUMBUS AVENUE
GBA-5TH FLOOR
NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Qing He (Contact Author)

Renmin University of China ( email )

Room 705
Mingde main building
Beijing, Beijing 100872
China

Haitian Lu

Hong Kong Polytechnic University ( email )

School of Accounting and Finance
Hung Hom
Hong Kong

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