The differential effect of social disclosure on loan funding and loan repayment: evidence from fixed-rate peer-to-peer lending

Purpose The purpose of this study is to examine the effects of social disclosure on loan funding and repayment within the fixed-rate peer-to-peer (P2P) lending model. Design/methodology/approach By analyzing 31,637 loans from the largest P2P lending company in the USA, the authors study the effects of different forms of social disclosures and the specific contents of such disclosures on the speed of funding, amount borrowed, recovered principal amount and loan default. Findings Some social disclosures help to fund a loan and are positively associated with loan repayment. The findings reveal prescriptive ways P2P borrowers indicate creditworthiness through social disclosure on loan listings. Practical implications The results suggest that it is advantageous for P2P borrowers to invest time into well-written loan descriptions and remain engaged with potential lenders. Originality/value The authors show that some social disclosure factors that affect funding time and likelihood do not necessarily affect the loan default and repayment in the same way.