Recently, P2P lending has become a hot research topic in finance, especially after the global financial crisis. Most existing research did not consider the efficiency from the borrowers’ perspective. This paper proposes a decision support system based on intelligent agents in P2P Lending for borrowers. The system provides borrowers with individual risk assessment, eligible lender search, lendin...

We document that banking deregulation increases competition, increased competition leads banks to offer lower initial rate on adjustable-rate mortgages (ARMs) to attract borrowers, but they also shroud these contracts by designing them with back-loaded resetting rates. Shrouding helps banks to offset about 73% of their losses from price discount due to competition. Deregulation increases the pr...

We develop a model of the credit market where competitive lenders offer long-term contracts specifying a non-linear schedule of possible repayment schedules to borrowers who may differ both in their taste for immediate gratification (β) and their prior beliefs about that taste (β̂). The equilibrium contract to a borrower with given beliefs β̂ is discontinuous: it features an advantageous option i...

Online peer-to-peer (P2P) lending has developed fast around the world in recent years; however, studies regarding gender discrimination and its rationality for developing countries are limited. Gender discrimination towards borrowers and its rationality in P2P lending in China are studied in this paper. Using data collected from PPdai.com, one of the largest P2P lending platforms in China, we f...

This paper studies the equilibrium predatory practices that may arise when the borrowers have behavioral weaknesses. Rational lenders offer short term contracts that can be renewed at the cost of paying a penalty fee. We show how the optimal contracts depend on the degree of näıveté of the time inconsistent customers. Penalty fees have a dual role : they increase market share by providing a use...

This study examines whether microfinance institutions (MFIs) that serve women borrowers at the base of the economic pyramid are likely to adopt a written code of positive organizational ethics (POE). Using econometric analysis of operational and economic data of a sample of MFIs from across the world, we find that two contextual factors—poverty level and lack of women’s empowerment—moderate the...

Does advertising help consumers to find the products they need or push them to buy products they don’t need? In this paper, we study the effects of advertising on consumer mistakes and quantify the resulting effect on consumer welfare in the market for mortgage refinancing. Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting ...

This paper uses a new survey-based data set and a model with strong theoretical underpinnings to explain the characteristics and behaviour of discouraged borrowers in the euro area. The results show that more borrowers are discouraged when the average interest rate charged by banks in a country is higher. Higher corporate tax rates, on the other hand, lead to lower discouragement. We show that ...

• Self-Confirming Crisis based on competitive lenders’ misperceptions of the true state economy. Credit Easing can be an optimal policy response, breaking a credit freeze with high interest rates. helps to reveal economy, even if Central Bank is not better informed than private lenders. as revenue-neutral tax borrowers and subsidy lenders, that effectively taxes lenders who do follow recommende...

The study examined the determinants of credit default by Micro Finance Institution borrowers case Hawassa city. researcher used a quantitative research approach with an explanatory design to establish effect independent variables on dependent variable. primary data were collected from 360 sampled Institutions using structured questionnaire. Both descriptive and inferential statistics analysis d...