Words Matter: The Role of Readability, Tone, and Deception Cues in Online Credit Markets

Qiang Gao, Mingfeng Lin, Richard Sias

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

Using debt crowdfunding data, we investigate whether borrowers' writing style is associated with an online lender and borrower behaviors, whether the information contained in linguistic style can mitigate information asymmetry in peer-To-peer markets, and whether online investors correctly interpret the economic value of written texts. Peer-To-peer lenders bid more aggressively, are more likely to fund, and charge lower rates to online borrowers whose writing is more readable, more positive, and contains fewer deception cues. Moreover, such borrowers are less likely to default. Online investors, however, fail to fully account for the information contained in borrowers' writing.

Original languageEnglish (US)
Pages (from-to)1-28
Number of pages28
JournalJournal of Financial and Quantitative Analysis
Volume58
Issue number1
DOIs
StatePublished - Feb 9 2023

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Words Matter: The Role of Readability, Tone, and Deception Cues in Online Credit Markets'. Together they form a unique fingerprint.

Cite this