Oleksandr Talavera (University of Birmingham): Herding Behaviour in P2P Lending Markets

Oleksandr Talavera (University of Birmingham): Herding Behaviour in P2P Lending Markets

Co-authors: Mustafa Caglayan (School of Social Sciences, Heriot-Watt University) and Wei Zhang (College of Management and Economics, Tianjin University)

Abstract
This paper investigates herding behaviour in peer-to-peer (P2P) Lending markets. Our data come from Renrendai.com, a popular Chinese P2P platform, which have about 110,000 bidding over 2010-2018. Our investigation yields evidence of herding behaviour, whose impact varies depending on the time of day. Further scrutiny provides evidence in favour of rational herding. We next implement an innovative approach and examine data on individual bidder activity to account for investor heterogeneity. This new approach provides absolute evidence of herding behaviour, as herding is a behavioural response of investors under uncertainty.

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