Usage of Pre-Made Text-Modules and Peer-Groups for Mitigating Information Asymmetry in Social Lending: Evidence on Funding Success from German Platform Smava

Recently, several platforms for arranging credit mediation between borrowers and lenders without usage of a financial intermediary have emerged. Social lending has attracted the interest of researchers who analyzed the behavior of borrowers and lenders on these platforms. The authors examine the impact of pre-made text modules and usage of peer groups on the funding success of a credit request. Analyzing empirical data from the German social lending platform Smava, the authors find evidence that the use of pre-made text modules doesn’t influence lender decisions significantly. Additionally, the authors find that the usage of peer groups significantly influences funding success, if borrowers seek affiliation to groups with only few members.