Lending to Strangers: Does Verification Matter?

31 Pages Posted: 16 Jan 2014

See all articles by Michael S. Maier

Michael S. Maier

University of Alberta - Alberta School of Business

Date Written: January 15, 2014

Abstract

Using data provided by a peer-to-peer lending website, this paper provides evidence that the market values voluntary verification of information even in the absence of audit regulations and standards. In this study, lenders are more likely to fund a loan and provide lower rates to borrowers who join groups providing verification services. Borrowers who have their information verified are also less likely to default on their loans. Borrowers who join a group that does not have a verification requirement also obtain loans easier than individuals who are not group members; however, they do not receive better interest rates.

Keywords: Assurance services, voluntary adoption, value of audit

Suggested Citation

Maier, Michael, Lending to Strangers: Does Verification Matter? (January 15, 2014). 2014 Canadian Academic Accounting Association (CAAA) Annual Conference, Available at SSRN: https://ssrn.com/abstract=2379593 or http://dx.doi.org/10.2139/ssrn.2379593

Michael Maier (Contact Author)

University of Alberta - Alberta School of Business ( email )

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