Abstract

In this paper, we draw upon the bank survival literature and that in the information management area in identifying the key factors behind the survival of Chinese online P2P lending platforms. In particular, we are interested in determining whether the traditional financial capital or the social capital, associated with the online nature of these innovative lending platforms, plays a more essential role. We implement a flexible proportional odds model with a baseline spline function to analyze survival patterns and also consider potential fractional polynomial transformation and time-dependent effect of variables. Using a hand-collected dataset of 6190 platforms from June 2007 to June 2017, we provide robust evidence that although financial capital variables play an important role in driving platform survival, they are less significant or become insignificance in the presence of social capital variables. These findings contribute to both the literature and the development of this innovative and fast-growing industry of financial inclusion

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