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Peer to Peer Lending Analysis Conclusions

Peer to Peer Lending Analysis Conclusions

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Published by Ray Garcia
A research project in using pattern recognition to analyze Peer to Peer lending data. Project was part of guidance that I gave to a students in a Pattern Recognition course at MIT Media Lab Center for Future Banking. I provide the guidance on the business topic and line of inquiry. The findings are relevant to Banks considering entering the peer to peer lending market.
A research project in using pattern recognition to analyze Peer to Peer lending data. Project was part of guidance that I gave to a students in a Pattern Recognition course at MIT Media Lab Center for Future Banking. I provide the guidance on the business topic and line of inquiry. The findings are relevant to Banks considering entering the peer to peer lending market.

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Published by: Ray Garcia on Feb 26, 2009
Copyright:Attribution Non-commercial No-derivs

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04/02/2013

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NETWORK ECONOMIES
peer-to-peer lendingQuantitative Analysis Review
Pattern RecognitionMIT Media Lab Class
 January 16
th
2009
contact: Ray Garciargarcia@media.mit.edu
Copyright 2009
 
2
Synopsis of Research Results
Predictive Accuracy
Predictable with 80% accuracy Loan conversion and defaultsAble to detect borrowers financial health by payment record
Social Factors
Increase odds of getting a loan when financial features are similarEvidence of preferential attachment with threshold number of bids
Probable lender biases
Demonstrated the textual information influences a loanShows that images posted by borrower matter
OVERVIEW
 
3
Business Implications
Tools may need to be provided
For borrowers who need help to increase their odds of getting aloanFor lenders to detect pending defaults.For P2P to manage risk
Existing Social Networks should be exploited
As loan volume increases the likelihood of similar financialsbecomes greater therefore the social aspects of assessing thequality of the borrower becomes more important.User may be reluctant to build a social network on a P2P sitewhen they have already done so elsewhereSocial networks may have a natural affinity for lending thereforeincreasing loan volumes.
OVERVIEW

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