Money & society · 2021
On a Chinese online lending platform, was passing verification always linked to better repayment?
No. In Renrendai.com records from January through June 2015, passing some kinds of verification was associated with a greater likelihood of failing to repay, while passing others was associated with a lower likelihood. These were observational associations, not evidence that verification itself changed repayment behavior.
Details
The study examined peer-to-peer lending, where people borrow from other people through an online platform. Researchers used four machine-learning methods to analyze repayment patterns in records from Renrendai.com in China.
Passing video, mobile phone, job, residence or education-level verification was associated with a higher likelihood of failing to repay. Passing identity or asset certification was associated with a lower likelihood. The central finding is that different kinds of verification did not all point toward lower repayment risk.
The abstract does not specify the exact comparison group for each association or how large the differences were. It also does not establish why these patterns occurred. The evidence comes from a single platform over a six-month period, so whether the patterns apply to other platforms or later borrowers remains uncertain.
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