Open AccessThe Impact of Automated Investment on Peer-to-peer Lending
Publication year - 2021
Publication title -
journal of global information management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.315
H-Index - 41
eISSN - 1533-7995
pISSN - 1062-7375
DOI - 10.4018/jgim.20211101oa45
Subject(s) - investment (military) , return on investment , herding , loan , business , competition (biology) , duration (music) , replicate , matching (statistics) , sample (material) , open ended investment company , finance , economics , microeconomics , statistics , art , mathematics , law , ecology , chemistry , literature , forestry , biology , chromatography , political science , production (economics) , politics , geography
In the face of fierce competition, many peer-to-peer (P2P) lending platforms have introduced automated investment tools to serve customers better. Based on a large sample of data from PPdai.com, the authors studied the impact of automated investment on lenders’ investment behavior and platform performance. Using the propensity score matching (PSM) method, this article checks the differences of funding duration and loan performance with and without participation of automated investment tools in P2P lending. Our empirical results show that automated investment in P2P lending can significantly weaken investors’ herding behavior. The authors also found that automated investment prolongs the average funding duration of loans and undermines the platform efficiency. Furthermore, this study indicates that usage of automated investment does not affect the return on investment (ROI) in general.