Title: On the effects of misspellings on lender demand in peer-to-peer lending

Authors: Randall J. Hucks

Addresses: Gary M. Owen College of Business, Eastern Michigan University, USA

Abstract: I analyse borrower submitted free-form descriptions of anonymous peer-to-peer (P2P) loans from the US-based P2P lending website LendingClub.com and find that borrower misspellings predict lower funding rates, and longer times to fund. Prior empirical studies suggest that poor spelling in peer-to-peer lending disclosures is used as a substitute for hard credit information; my findings show that poor spelling is perceived as a signal of the communicator's quality regardless of the quality of the information environment. Further, I demonstrate that the negative relation between misspelling and lender demand holds generally, regardless of borrower or loan characteristics, confirming prior experimental research.

Keywords: peer to peer lending; P2P lending; LendingClub; lending club; USA; spelling; misspelling; lender demand; textual analysis; time-to-fund; fintech; financial technology.

DOI: 10.1504/IJEF.2023.133841

International Journal of Electronic Finance, 2023 Vol.12 No.4, pp.374 - 402

Received: 14 Apr 2022
Accepted: 04 Dec 2022
Published online: 04 Oct 2023 *

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