The Influence of Regional Sentiment on Online Borrowing

52 Pages Posted: 16 Feb 2022 Last revised: 12 Dec 2023

See all articles by William Bazley

William Bazley

University of Kansas

Sima Jannati

University of Texas at Arlington

Date Written: December 11, 2023


Innovations in financial technology have broadened individuals' access to unsecured personal loans. Drawing on insights from consumer behavior research linking negative emotions to credit-financed consumption, we demonstrate that transitory emotions impact the aggregate use of online loans in a region. Specifically, an increase in households' lack of positive emotion in a Metropolitan Statistical Area (MSA) correlates with a higher demand for loans in that area. However, this emotion-driven borrowing is associated with a lower likelihood of repayment. Moreover, we find that transient emotions do not affect the use of debt provided by traditional credit suppliers. Our evidence underscores the heterogeneous implications of negative sentiments for borrowing behavior, contingent on the convenience of the debt source.

Keywords: Emotions, financial technology, peer-to-peer credit

JEL Classification: D12, D14, G40, G51

Suggested Citation

Bazley, William and Jannati, Sima, The Influence of Regional Sentiment on Online Borrowing (December 11, 2023). Available at SSRN: or

William Bazley

University of Kansas ( email )

3143 Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States

Sima Jannati (Contact Author)

University of Texas at Arlington ( email )

701 S. West Street
Arlington, TX 76019
United States

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