Abstract
We explore lender behaviour on Renrendai.com, a leading Chinese peer-to-peer (P2P) crowdlending platform. Using a sample of around five million investor-loan-hour observations, and applying a high-dimensional fixed effect estimator, we confirm evidence of herding behaviour: the investors in our sample prefer assets that had attracted strong interest in previous periods. The herding behaviour relates to both the experience level of the investor and the length of time of an investment session on the platform. We also provide evidence of significant herding behaviour in the first hour of experienced investors’ sessions. Our results are robust to the use of alternative specifications.
•We explore lender behaviour on a leading Chinese crowdlending platform.•The investors prefer assets that had attracted strong interest in previous hour.•Experienced lenders are more likely to herd compared to unexperienced ones.•Herding is also higher at the beginning of investment sessions.