Network centrality effects in peer to peer lending

This paper investigates the impact of network centrality on borrowers’ and lenders’ behavior in P2P lending. The empirical analysis on a leading Chinese lending platform reveals that the lenders who are in the center of a network not only invest by larger amounts but also more swiftly than their peers, reflecting the experience and information advantage arising from their position in the network. Furthermore central borrowers can borrow at lower interest rates with higher success rates, and have lower probability of default.