Peer-to-peer lending and bias in crowd decision-making

Pramesh Singh, Jayaram Uparna, Panagiotis Karampourniotis, Emoke Agnes Horvat, Boleslaw Szymanski, Gyorgy Korniss, Jonathan Z. Bakdash, Brian Uzzi*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


Peer-to-peer lending is hypothesized to help equalize economic opportunities for the world’s poor. We empirically investigate the “flat-world” hypothesis, the idea that globalization eventually leads to economic equality, using crowdfinancing data for over 660,000 loans in 220 nations and territories made between 2005 and 2013. Contrary to the flat-world hypothesis, we find that peer-to-peer lending networks are moving away from flatness. Furthermore, decreasing flatness is strongly associated with multiple variables: relatively stable patterns in the difference in the per capita GDP between borrowing and lending nations, ongoing migration flows from borrowing to lending nations worldwide, and the existence of a tie as a historic colonial. Our regression analysis also indicates a spatial preference in lending for geographically proximal borrowers. To estimate the robustness for these patterns for future changes, we construct a network of borrower and lending nations based on the observed data. Then, to perturb the network, we stochastically simulate policy and event shocks (e.g., erecting walls) or regulatory shocks (e.g., Brexit). The simulations project a drift towards rather than away from flatness. However, levels of flatness persist only for randomly distributed shocks. By contrast, loss of the top borrowing nations produces more flatness, not less, indicating how the welfare of the overall system is tied to a few distinctive and critical country–pair relationships.

Original languageEnglish (US)
Article numbere0193007
JournalPloS one
Issue number3
StatePublished - Mar 2018

ASJC Scopus subject areas

  • General


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