1. College of Management and Economics, Tianjin University, Tianjin 300072, China;2. China Center for Social Computing and Analytics, Tianjin 300072, China;1. Department of Economics, The Chinese University of Hong Kong, China;2. Fordham University, Bank of Finland, and University of Sydney, 45 Columbus Avenue, 5th Floor, New York, NY 10023, USA
Abstract:
We explore lender behaviour on Renrendai.com, a leading Chinese peer-to-peer (P2P) crowdlending platform. Using a sample of around five million investor-loan-hour observations, and applying a high-dimensional fixed effect estimator, we confirm evidence of herding behaviour: the investors in our sample prefer assets that had attracted strong interest in previous periods. The herding behaviour relates to both the experience level of the investor and the length of time of an investment session on the platform. We also provide evidence of significant herding behaviour in the first hour of experienced investors’ sessions. Our results are robust to the use of alternative specifications.
