Statistics

Psychology

Microeconomics

Communication

Social capital

Social psychology

Economics

Loan

Archaeology

Finance

Ceteris paribus

Business

Propensity score matching

Mathematics

Political science

Monetary economics

Affect (linguistics)

Trustworthiness

Social trust

Capital (architecture)

History

Interpersonal ties

Journal of Financial and Quantitative Analysis

How does social capital affect trust? Evidence from a Chinese peer-to-peer lending platform shows that regional social capital affects the trustee’s trustworthiness and the trustor’s trust propensity. Ceteris paribus, borrowers from regions with higher social capital receive larger bids from individual lenders and have higher funding success, larger loan sizes, and lower default rates, especially for low-quality borrowers. Lenders from regions with higher social capital take higher risks and have higher default rates, especially for inexperienced lenders. Cross-regional transactions are most (least) likely to be realized between parties from regions with high (low) social capital.

Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-Peer Lending