TY - JOUR
T1 - Friendships in online peer-to-peer lending
T2 - Pipes, prisms, and relational herding
AU - De, Liu
AU - Brass, Daniel J.
AU - Lu, Yong
AU - Chen, Dongyu
PY - 2015/9/1
Y1 - 2015/9/1
N2 - This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online, peer-to-peer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial pipes by lending money to the borrower. On the other hand, the prism effect of friends' endorsements via bidding on a loan negatively affects subsequent bids by third parties. However, when offline friends of a potential lender, especially close friends, place a bid, a relational herding effect occurs as potential lenders are likely to follow their offline friends with a bid.
AB - This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online, peer-to-peer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial pipes by lending money to the borrower. On the other hand, the prism effect of friends' endorsements via bidding on a loan negatively affects subsequent bids by third parties. However, when offline friends of a potential lender, especially close friends, place a bid, a relational herding effect occurs as potential lenders are likely to follow their offline friends with a bid.
KW - Friendship relationships
KW - Herding
KW - Peer-to-peer lending
KW - Prism effect
KW - Social networks
UR - http://www.scopus.com/inward/record.url?scp=84942794689&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84942794689&partnerID=8YFLogxK
U2 - 10.25300/misq/2015/39.3.11
DO - 10.25300/misq/2015/39.3.11
M3 - Article
AN - SCOPUS:84942794689
SN - 0276-7783
VL - 39
SP - 729
EP - 742
JO - MIS Quarterly: Management Information Systems
JF - MIS Quarterly: Management Information Systems
IS - 3
ER -