Online lenders prioritize employment over default risk, risking loan repayment.
The article explores how online lending works efficiently. The researchers created a model to understand how borrowers and lenders behave in peer-to-peer lending. They found that lenders focus on borrower characteristics like employment status when deciding which loans to fund. However, they may not always consider characteristics that predict loan default. The study suggests that lenders value certain borrower traits but may overlook important factors that could help minimize the risk of default.