Through empirical analysis of individual micro data from one peer-to-peer lending platform, this paper aims to expand the research on regional discrimination in China's P2P lending market from a new perspective. Descriptive statistics of orders and difference test of success rate show that, for cities of different grades, there is a huge difference in the success rate. The main empirical finding is that under the control of other factors, city grade has a significant positive effect on loan success rate, namely the success rate of cities developing better is higher, revealing the existence of regional discrimination. Further study find the default rate of less developed cities, whose success rate is lower, is relatively higher, which proves the regional discrimination here is a rational statistical discrimination.
Shi, Lidan and Zhang, Liyi, "Regional Discrimination in P2P Lending of China" (2016). ICEB 2016 Proceedings. 37.