Borrower’s default and self-disclosure of social media information in P2P lending

Background:We examine the signaling effect of borrowers’social media behavior,especially self-disclosure behavior,on the default probability of money borrowers on a peer-to-peer(P2P)lending site.Method:We use a unique dataset that combines loan data from a large P2P lending site with the borrower’s social media presence data from a popular social media site.Results:Through a natural experiment enabled by an instrument variable,we identify two forms of social media information that act as signals of borrowers’creditworthiness:(1)borrowers’choice to self-disclose their social media account to the P2P lending site,and(2)borrowers’social media behavior,such as their social network scope and social media engagement.Conclusion:This study offers new insights for screening borrowers in P2P lending and a novel usage of social media information.