Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Magnitude Effects in Lending and Borrowing: Empirical Evidence from a P2P Platform
Department of Finance, RWTH Aachen University, Aachen, Germany.ORCID iD: 0000-0001-5470-4263
Department of Finance, RWTH Aachen University, Aachen, Germany.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Real Estate Economics and Finance.ORCID iD: 0000-0002-3384-7166
2020 (English)In: European Journal of Finance, ISSN 1351-847X, E-ISSN 1466-4364, Vol. 26, no 9, p. 854-873Article in journal (Refereed) Published
Abstract [en]

For varying borrowing and lending amounts, the corresponding subjective discount rates will also vary. A situation where high amounts correspond to lower discount rates is called a conventional magnitude effect, while the opposite is called a reverse magnitude effect. We present an overview of the theoretical arguments for both kinds of magnitude effects. Against this background, we then offer the first comprehensive empirical analysis of this issue based on real-life transaction data. To do so, we rely on more than 9,000 credit applications from the formerly largest German peer-to-peer (P2P) lending platform, Smava, between February 2007 and April 2013. We confirm that there is a conventional magnitude effect for lending money to others but a reverse magnitude effect for borrowing decisions. We suggest, as an explanation for our findings, the prevalence of cost-based determinants of magnitude effects in this special setting.

Place, publisher, year, edition, pages
Routledge, 2020. Vol. 26, no 9, p. 854-873
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-266132DOI: 10.1080/1351847X.2019.1709525ISI: 000505442800001Scopus ID: 2-s2.0-85077860075OAI: oai:DiVA.org:kth-266132DiVA, id: diva2:1381635
Note

QC 20200109

Available from: 2019-12-24 Created: 2019-12-24 Last updated: 2020-04-22Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full textScopus

Authority records BETA

Steininger, Bertram I.

Search in DiVA

By author/editor
Breuer, WolfgangSteininger, Bertram I.
By organisation
Real Estate Economics and Finance
In the same journal
European Journal of Finance
Economics and Business

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 78 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf