How Does Social Capital Influence Online P2P Lending? A Cross-Country Analysis

Online People-to-People (P2P) lending marketplace allows individuals to lend and borrow directly among each other without the mediation of a creditor bank institution. Prior literature has examined how social capital influences P2P loan performance, but has largely been limited to the Western context. This paper thus explores how social capital influences P2P lending in the U.S. and China. Based on the archival data of Prosper and PPDai, we compare the influence of social capital in different communities and different cultures. The empirical results show that social capital is not equally important in different cultures. Social capital seems to be more influential for likelihood of getting funded in China than in the U.S. In contrast, social capital has influence on interest rate in the U.S. only. Our study thus extends current understanding about how social capital influences online communities in a global perspective.