Professor Zhang Bo and Associate Professor Li Jianwen Make Important Research Progress in Humanistic Economics
Recently, the collaborative paper Do Borrowers’ Cultural Norms Matter in Marketplace Lending? Evidence From Local Confucianism by Professor Zhang Bo and Associate Professor Li Jianwen from the School of Economics was published online in Financial Management, an international authoritative finance journal. From the perspective of regional cultural norms, this research systematically analyzes the impact of Confucian culture in the borrower's region on the results of market-oriented lending transactions and its mechanism, revealing the important role of Confucian cultural norms emphasizing "promises must be kept and actions must be resolute" in alleviating information asymmetry and promoting trust formation in the digital finance scenario.
As a financing model that connects borrowers and lenders directly without financial intermediaries, market-oriented lending relying on Internet platforms has developed rapidly worldwide in recent years. However, due to the lack of sufficient credit information and professional risk assessment mechanisms, such markets generally face high credit risks caused by information asymmetry. In the decision-making process, investors often need to rely on "soft information" such as borrowers' cultural norms to judge their default risk and credibility.
Based on micro transaction data from a large market-oriented lending platform in China, this research finds that borrowers from regions with stronger influence of Confucian culture have a higher probability of successful financing and a higher proportion of funds obtained by bidding targets. This cultural effect is particularly obvious for borrowers with high information asymmetry and those from regions with low trust level or imperfect contract enforcement environment. In addition, borrowers from regions with stronger influence of Confucian culture have lower loan default risk and higher probability of on-time repayment, so investors can obtain better investment returns, indicating that investors' use of cultural information is not based on stereotypes or behavioral deviations but on rational expectations. Therefore, the integrity, self-discipline and responsibility emphasized by Confucian culture can not only strengthen the predictability of behavior and improve the level of trust between both parties to the transaction but also effectively constrain borrowers' behavior, thereby reducing moral hazard and improving market efficiency.
The core mechanism revealed by this research clearly reflects the value-leading role of culture in financial and economic development, and has strong practical significance for the rapidly developing digital finance market. In such a disintermediated emerging financial scenario, traditional cultural norms may still shape market operation efficiency by affecting information processing and trust formation.
