Which Factors Drive the Prepayment of P2P Lending? Evidence from Prosper.Com

This paper investigates which factors drive the prepayment of Peer-to-Peer (P2P) lending based on the data collected from Prosper.com. By using the lending data of 50,109 loans between July 2009 and August 2013, we find that higher interest rate and loan amount indicate lower probability that the borrower fully paid the loan before the maturity. For the borrower characteristics, debt to income, employment length, delinquent amount, and revolving payment are significantly and negatively affect the outcome of the loans. Macroeconomic variable GDP growth is positivity significant while lending rate is negatively and significantly related to the probability of prepayment of the loans. We also find that monthly income and Prosper Rating are the main reasons which drive the borrowers to fully paid the loan before the maturity.