The Information Value of Online Social Networks: Lessons from Peer-to-Peer Lending / Seth Freedman, Ginger Zhe Jin.

Format:

Book

Author/Creator:

Freedman, Seth.

Contributor:

National Bureau of Economic Research.

Jin, Ginger Zhe.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19820.

NBER working paper series no. w19820

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Information Value of Online Social Networks

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We examine whether social networks facilitate online markets using data from a leading peer-to-peer lending website. We find that borrowers with social ties are consistently more likely to have their loans funded and receive lower interest rates; however, most borrowers with social ties are more likely to pay late or default. We provide evidence that these findings are driven by lenders not fully understanding the relationship between social ties and unobserved borrower quality. Overall, our findings suggest caution for using online social networks as a signal of quality in anonymous transactions.

Notes:

Print version record

January 2014.