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Prediction of Default Risk in Peer-to-Peer Lending Using Structured and Unstructured Data

Prediction of Default Risk in Peer-to-Peer Lending Using Structured and Unstructured Data <p>Using data from <italic>Lending Club</italic>, we analyzed funded loans between 2012 and 2013, the default status of which were mostly known in 2018. Our results showed that both the borrower characteristics and the conditions of the loan were significantly associated with the loan default rate. Results also showed that the sentiment of a user-written loan description influenced the borrower's loan interest rates. It contributes to expanding the scope of peer-to-peer (P2P) loan research by implementing unstructured data as a new model variable. Financial counselors need to consider the growth potential of the P2P loan market using data analysis: This will reveal niche market opportunities, enabling the development of services necessary for the safe supply of small loans at reasonable interest rates.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Counseling and Planning Springer Publishing

Prediction of Default Risk in Peer-to-Peer Lending Using Structured and Unstructured Data

Journal of Financial Counseling and Planning , Volume 31 (1): 15 – Jun 24, 2020

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Publisher
Springer Publishing
Copyright
© 2020 Springer Publishing Company
ISSN
1052-3073
eISSN
1947-7910
DOI
10.1891/JFCP-18-00073
Publisher site
See Article on Publisher Site

Abstract

<p>Using data from <italic>Lending Club</italic>, we analyzed funded loans between 2012 and 2013, the default status of which were mostly known in 2018. Our results showed that both the borrower characteristics and the conditions of the loan were significantly associated with the loan default rate. Results also showed that the sentiment of a user-written loan description influenced the borrower's loan interest rates. It contributes to expanding the scope of peer-to-peer (P2P) loan research by implementing unstructured data as a new model variable. Financial counselors need to consider the growth potential of the P2P loan market using data analysis: This will reveal niche market opportunities, enabling the development of services necessary for the safe supply of small loans at reasonable interest rates.</p>

Journal

Journal of Financial Counseling and PlanningSpringer Publishing

Published: Jun 24, 2020

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