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What's in a Picture?: Evidence of Discrimination from Prosper.com

What's in a Picture?: Evidence of Discrimination from Prosper.com We find evidence of significant racial disparities in a new type of credit market known as peer-to-peer lending. Loan listings with blacks in the attached picture are 25 to 35 percent less likely to receive funding than those of whites with similar credit profiles. Despite the higher average interest rates charged to blacks, lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates. These results provide insight into whether the discrimination we find is taste-based or statistical. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resources University of Wisconsin Press

What's in a Picture?: Evidence of Discrimination from Prosper.com

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Publisher
University of Wisconsin Press
ISSN
1548-8004

Abstract

We find evidence of significant racial disparities in a new type of credit market known as peer-to-peer lending. Loan listings with blacks in the attached picture are 25 to 35 percent less likely to receive funding than those of whites with similar credit profiles. Despite the higher average interest rates charged to blacks, lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates. These results provide insight into whether the discrimination we find is taste-based or statistical.

Journal

Journal of Human Resources – University of Wisconsin Press

Published: Apr 4, 2012

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