NDLI: Paralyzed by Shock and Confused by Glut: The Portfolio Formation Behavior of Peer-to-Business Lending Investors

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Paralyzed by Shock and Confused by Glut: The Portfolio Formation Behavior of Peer-to-Business Lending Investors

Content Provider	Scilit
Author	Dorfleitner, Gregor Hornuf, Lars Weber, Martina
Copyright Year	2018
Description	Journal: SSRN Electronic Journal We study the investor behavior on a leading peer-to-business lending platform and find evidence of two new investment biases-a default shock bias and a deep market bias. First, we find investors to stop investing in new loans and to cease from diversifying their portfolio after experiencing a loan default. This default shock significantly worsens the risk-return profile of investors' loan portfolios. Second, investors are unable to cope with a glut of loan campaigns. Similar to the default shock bias, investors cease from investing in new loans and consequently underdiversify their portfolios as more loans become available on the platform. Deeper markets also result in a deterioration of investors' risk-return profiles. Third, investment experience on the platform reduces the effect of the deep market bias.
Related Links	https://www.econstor.eu/bitstream/10419/180354/1/cesifo1_wp7092.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3186093
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3186093
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2018-05-27
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Behavioral Finance Peer-to-business Lending
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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