Drivers and consequences of borrowers' voluntary privacy information disclosure—Evidence from a Chinese online consumer financing platform

Abstract

This study explores the drivers and consequences of consumers' voluntary information disclosure in the context of online consumer financing. Using unique secondary data from a Chinese online consumer financing company, we uncover a non-linear relationship between borrowers' credit ratings and the quantity of voluntary information disclosure, and an inverted U-shaped relationship between the amount of information disclosure and loan default. Specifically, low-credit borrowers who opt for more voluntary information disclosure manifest a higher likelihood of default than those who disclose less, suggesting a strategic inclination toward information disclosure. Finally, we identify that disclosing high-cost information reduces loan default, whereas disclosing low-cost information increases default. Our findings enrich the existing literature on consumer information disclosure by providing insights into the underlying motivation and highlighting the applicability of signaling theory and privacy calculus theory. This has practical implications for lenders, borrowers, and regulators in overcoming barriers in online lending.