Personal Guarantee and Peer-To-Peer Lending: Evidence from China

Personal Guarantee and Peer-To-Peer Lending: Evidence from China | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Personal Guarantee and Peer-To-Peer Lending: Evidence from China Sumit Agarwal, Yan Li, Chunlin Liu, Jian Zhang This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7755377/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract In this study, we examine the effect of personal guarantees in China's peer-to-peer lending market. We leverage a unique context where personal guarantees are not strictly relationship based. This setting reveals a significant economic effect of personal guarantees in enabling debt financing. Loans with guarantees are more likely to be funded, experience shorter intervals between posting and funding, attract greater bidding activity, and incur lower borrowing costs. However, such loans tend to have higher delinquency rates on average. Further analysis examines two potential mechanisms for this underperformance: adverse selection and moral hazard. The evidence supports the moral hazard theory, as non-relationship-based guarantees alter borrower incentives, leading to poorer loan performance. JEL Classification Codes : D53, D82, G2 Peer-to-peer lending Guarantee Debt financing Adverse selection and moral hazard Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7755377","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":527311630,"identity":"28658c92-86f1-4523-9da7-09deec16b46c","order_by":0,"name":"Sumit Agarwal","email":"","orcid":"","institution":"National University of Singapore","correspondingAuthor":false,"prefix":"","firstName":"Sumit","middleName":"","lastName":"Agarwal","suffix":""},{"id":527311631,"identity":"b16216fd-107b-4763-a002-0a20baae33d5","order_by":1,"name":"Yan Li","email":"","orcid":"","institution":"Renmin University of China 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