University of Twente Student Theses
Factors affecting the interest rate in peer-to-peer lending in Bulgaria
Draganov, Viktor (2024) Factors affecting the interest rate in peer-to-peer lending in Bulgaria.
|
PDF
367kB |
| Abstract: | In this paper we investigate borrower characteristics, such as expense income ratio, age, gender, and education and their effect on interest rate in the context of Peer-to-peer lending in Bulgaria. This study was conducted by analyzing publicly available information provided by the biggest P2P lending platform in Bulgaria, Klear. We found that higher education has a significant negative impact on interest rate. Conversely, female and older borrowers receive higher interest rates. Similarly, a high expense-to-income ratio led to higher interest rates. The results of the study are in line with the signaling theory reinforcing its reliability with regards to reducing information asymmetry, which continues to be one of the greatest obstacles in alternative finance. This study emphasizes that it is imperative to include more borrower characteristics in the risk evaluation of a given loan, as lenders would be able to make more informed lending decisions. Finally, P2P lending platforms should ensure higher integrity of income verification tools as this would enable more fluent borrower-lender interactions, potentially reducing perceived risk. |
| Item Type: | Essay (Bachelor) |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Subject: | 83 economics |
| Programme: | International Business Administration BSc (50952) |
| Link to this item: | https://purl.utwente.nl/essays/100184 |
| Export this item as: | BibTeX EndNote HTML Citation Reference Manager |
Show download statistics for this publication
Show download statistics for this publicationRepository Staff Only: item control page