Evaluating Default Risk and Loan Performance in UK Peer-to-Peer Lending: Evidence from Funding Circle
The United Kingdom is the third-largest peer-to-peer (P2P) lending market in the world, which is surpassed only by the two dominant forces in P2P investing, China and the United States of America. As an innovative financial market in the UK, P2P lending brings not only many opportunities but also ma...
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| Veröffentlicht in: | Journal of advanced computational intelligence and intelligent informatics 2021-09, Vol.25 (5), p.530-538 |
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| creator | Xu, Boyu Su, Zhifang Celler, Jan |
| description | The United Kingdom is the third-largest peer-to-peer (P2P) lending market in the world, which is surpassed only by the two dominant forces in P2P investing, China and the United States of America. As an innovative financial market in the UK, P2P lending brings not only many opportunities but also many risks, especially the loan default risk. In this context, this paper uses binary logistic regression and survival analysis to evaluate default risk and loan performance in UK P2P lending. The empirical results indicate that credit group, loan purpose for capital needs, sector type, loan amount, interest rate, loan term, and the age of the company all have a significant impact on the probability of loan default. Among them, the interest rate, loan term, and loan purpose for capital needs are the three most important determinants of the probability of loan defaults and survival time of loans. |
| doi_str_mv | 10.20965/jaciii.2021.p0530 |
| format | Article |
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As an innovative financial market in the UK, P2P lending brings not only many opportunities but also many risks, especially the loan default risk. In this context, this paper uses binary logistic regression and survival analysis to evaluate default risk and loan performance in UK P2P lending. The empirical results indicate that credit group, loan purpose for capital needs, sector type, loan amount, interest rate, loan term, and the age of the company all have a significant impact on the probability of loan default. Among them, the interest rate, loan term, and loan purpose for capital needs are the three most important determinants of the probability of loan defaults and survival time of loans.</description><identifier>ISSN: 1343-0130</identifier><identifier>EISSN: 1883-8014</identifier><identifier>DOI: 10.20965/jaciii.2021.p0530</identifier><language>eng</language><publisher>Tokyo: Fuji Technology Press Co. 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| source | DOAJ Directory of Open Access Journals |
| subjects | Default Empirical analysis Interest rates Loans Peer to peer computing Peer to peer lending Risk assessment Statistical analysis Survival Survival analysis |
| title | Evaluating Default Risk and Loan Performance in UK Peer-to-Peer Lending: Evidence from Funding Circle |
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