This paper draws on signaling theory to examine the joint effects of platform investment and investment of reputable investors on the investment behavior of ordinary investors in online lending. We tested our hypotheses with a dataset of 2,276,380 bidding records pertaining to 46,140 loans posted on an online lending platform. Our results show that (1) The investment of reputable investors as a quality signal can increase the investment amount of subsequent investors. (2) Platform investment signal and reputable investment signal are complementary. In the loan projects with platform investment (compared to those without), investment of reputable investors exerts greater influence on the investment amount of subsequent investors. (3) Focusing on loan projects with platform investment, the investment of reputable investors has greater impact on the investment amount of subsequent investors after the platform investment. This paper offers important theoretical and practical implications.


Paper Number 1079; Track Platforms; Short Paper



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