How does P2P lending platform reputation affect lenders’ decision in China?

Purpose – This paper examines how the impact of Chinese P2P platform reputation directly and indirectly (mediate effect) affects investors’ (lenders) investment choices. Design/methodology/approach – Using data collected from 478 P2P platforms, this paper calculates Platform Reputation via a beta function after establishing the Reputation mechanism by Game Analysis. This is followed by testing both the direct effect of platform reputation on investors’ investment choices (proxying by transaction volume) and the indirect effect through credit enhancing information using three regression models (Median regression, OLS regression, and random effect OLS regression). A robustness test by adding instrument variables is conducted to confirm the findings from the main regressions. Findings – In China, P2P lending platform reputations have played both a direct and indirect (through credit enhancing information) roles on investors’ investment choices. Originality/value – This paper expands the boundary of P2P online lending research by not only examining the direct, but importantly, the indirect effects of platform reputations.