
Geographical-Proximity Bias in P2B Crowdlending Strategies
Gresse, Carole; Marin, Hugo (2021), Geographical-Proximity Bias in P2B Crowdlending Strategies, 37th Spring International Conference of the French Finance Association, 2021-05, Nantes / Online, France
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Type
Communication / ConférenceDate
2021Conference title
37th Spring International Conference of the French Finance AssociationConference date
2021-05Conference city
Nantes / OnlineConference country
FranceMetadata
Show full item recordAuthor(s)
Gresse, CaroleDauphine Recherches en Management [DRM]
Marin, Hugo
Dauphine Recherches en Management [DRM]
Abstract (EN)
Using data from a peer-to-business crowdlending platform that exploits an auction-driven system to fund corporate loans, we show that non-professional investors are subject to a geographical-proximity bias. They are more likely to win the auctions of borrowers located close to their place of residence notwithstanding that they are not better informed about their creditworthiness. Unexpectedly, this behavioral bias distorts the loan rate discovery processby increasing the cost of funding for borrowers. This adverse effect results from the greaterability of local investors to submit winning bids at an early stage. This ability is gained from their experience in previous auctions of geographically close borrowers. This suggests that the familiarity feeling stemming from geographical closeness strengthens investor attention,and thereby improves lenders’ knowledge about the dynamics of the order flow in local borrowers’ auctions.Subjects / Keywords
peer-to-business crowdlending; crowdfunding; behavioral finance; loan performance; price discovery processRelated items
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Gresse, Carole; Marin, Hugo (2021) Communication / Conférence
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Gresse, Carole; Marin, Hugo (2021) Communication / Conférence
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Gresse, Carole; Marin, Hugo (2022) Communication / Conférence
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Gresse, Carole; Marin, Hugo (2022) Communication / Conférence