Background: Online lending (P2P lending) is a type of internet finance mainly used to meet the financial needs of small and medium-sized enterprises and groups of individuals. It is a supplement to the traditional financial system. Method: This paper uses PPDai.com - the most influential online...

This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online Peer-to-Peer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial “pipes” by lending...