How Individual Investors React to Negative Events in the FinTech Era? Evidence from China’s Peer-to-Peer Lending Market

Abstract

Inexperienced individual investors are the main players in the emerging FinTech industry, and also suffer from frequent negative events in the markets. With 3,110 negative events and 467,594 transaction data of China's peer-to-peer lending market from 2015 to 2018, this paper analyzes how different types of platform negative events affect the decision-making of individual investors. We find that individual investors only have a significant negative reaction to moral hazard exposure events such as platforms absconding, with relatively ignorance of other types of negative events. The negative effect is rapid but short-lived, and shows differences among platforms of different background and attributes. By the mediation analysis, we find that public attention can be a mediator and explain the pattern of the impact that absconding events have on individual investors. Related risk prevention, regulation, investor education issues are discussed and further suggestions are also put forward for both individual investors and regulators.

Understanding FinTech Platform Adoption: Impacts of Perceived Value and Perceived Risk

“…Previous research focuses on exploring the financial-related adoption behavior from the perspective of technology adoption and contributes to our understanding of FinTech platforms [1,8,9,[11][12][13][14]. However, most studies focus on specific FinTech services such as online banking, and online payments, as well as peer-to-peer lending [9,[15][16][17][18][19][20][21][22][23][24][25][26][27]. Few of them explore factors that affect individuals' online wealth management platforms.…”

Can retail investors induce corporate green innovation? -Evidence from Baidu Search Index

“…The number of Internet users in China has reached 829 million as of December 2018, according to the 43rd Statistical Report on Internet Development in China released by the China Internet Network Information Center. Unlike the mature stock markets in Europe and America, retail investors are the primary fund providers and traders in China's stock market ( Snyder and Stromberg, 2010 ; Chen et al., 2021 ). Believed to be less informed and professional ( Chen et al., 2021 ), they tend to use the Internet to obtain stock investment information under the condition that professional investment software cannot wholly replace network search software.…”

“…Unlike the mature stock markets in Europe and America, retail investors are the primary fund providers and traders in China's stock market ( Snyder and Stromberg, 2010 ; Chen et al., 2021 ). Believed to be less informed and professional ( Chen et al., 2021 ), they tend to use the Internet to obtain stock investment information under the condition that professional investment software cannot wholly replace network search software. When investors type a stock's code, abbreviation, or full name into the search engine, it means that investors are trying to get information about the company.…”

“…Firstly, this paper is the first to focus investor attention on corporate green behavior. Most of the existing studies on the economic consequences of investor attention focus on the stock market ( Vozlyublennaia, 2014 ; Peng et al., 2015 ; Chen et al., 2021 ). This article takes the lead in analyzing the functional effect of investor attention on corporate environmental governance from the perspective of corporate green innovation, which undoubtedly broadens the research on the economic consequences of investor attention.…”

The Impact of Guarantees on Peer-to-Peer Lending Platform: Evolutionary Game Analysis and Empirical Evidence from China

“…The rapid pervasiveness of information and communication technology (ICT) has enabled numerous business opportunities and reconstructed the traditional business model [1,2], thus giving birth to peer-to-peer lending [3]. Through the creation of an online communication and transaction environment, peer-to-peer lending increases the effectiveness and efficiency of financing activities, acting as an appealing financing channel [4,5].…”