"Levelling the Field: Equitable Interest Rates for Unsecured Personal Loans" (with Ram Gopal, Xiao Qiao, and Moris Strub), Job Market Paper
AI-generated Podcast based on the paper: Link to the Podcast
Selected conference: UD and Philly Fed Fintech & Financial Institutions Conference, ICIS 2024, WITS 2023
This paper was previously circulated under the title "Doing Well by Doing Good: Interest Rate Determination for Unsecured Personal Loans"
Abstract: Interest rates are one of the most important design artifacts in online lending platforms. In principle, interest rates should be based on borrowers' credit risk, free from biases and inconsistencies. In practice, however, interest rates often exhibit biases and distortions that undermine this principle. This paper proposes a novel method for determining interest rates, grounded in the rationale that the risk-return trade-off of each loan must be equal, thereby ensuring all borrowers have access to credit at rates commensurate with their repayment risk. We evaluate interest rates set by a major online lending platform within the framework of the Equal Credit Opportunity Act. Our analysis reveals potential biases in interest rates associated with borrowers' race and income sources, as well as distortions where high-risk borrowers face disproportionately higher rates compared to low-risk borrowers. Implementing our proposed method enables loan providers to address these biases and reduce the interest rate gap between borrowers with varying credit scores by 38.7%. Moreover, the revised interest rates preserve the average return on investment across borrower groups. Our evaluation further employs counterfactual loan outcomes constructed through survival analysis and a large language model, which complement each other in improving predictive accuracy. These findings underscore the potential for loan providers to enhance fairness and expand credit access by adopting a more equitable interest rate determination methodology. This work has important implications for financial institutions, policymakers, and information system practitioners seeking to leverage technology to create more inclusive and equitable credit markets.
"Gaining a Seat at the Table: Enhancing the Attractiveness of Online Lending for Institutional Investors" (with Ram Gopal, Xiao Qiao, and Moris Strub), Information Systems Research (2025), 36(1), 326-343. [DOI]
AI-generated Podcast based on the paper: Link to the Podcast
Online interactive dashboard with Tableau: Link to Dashboard
"Levelling the Field: Equitable Interest Rates for Unsecured Personal Loans" (with Ram Gopal, Xiao Qiao, and Moris Strub), ICIS 2024 Proceeding [Link to Paper]
4th Hong Kong Conference for Fintech, AI, and Big Data in Business, Hong Kong SAR, China, May 2025 (Discussion)
University of Delaware and Federal Reserve Bank of Philadelphia Fintech & Financial Institutions Conference, Philadelphia, PA, U.S., Apr 2025
POMS-HK International Conference, Hong Kong SAR, China, Jan 2025
International Conference on Information Systems, Bangkok, Thailand, Dec 2024
The 1st Workshop on LLMs and Generative AI for Finance, Brooklyn, NY, U.S. (poster), Nov 2024
INFORMS ISS Paper Development Workshop for Early Career Scholars, Seattle, WA, U.S., Oct 2024
INFORMS Workshop on Data Science, Seattle, WA, U.S., Oct 2024
POMS-HK International Conference, Hong Kong SAR, China, Jan 2024
Workshop on Information Technologies and Systems, Online, Dec 2023
Annual Meeting of Financial Engineering and Financial Risk Management Branch of the OR Society of China, Fuzhou, China, Nov 2023
INFORMS Annual Meeting, Phoenix, AZ, U.S., Oct 2023
Applied Economics Student Workshop, National University of Singapore, Sept 2023
Asia Meeting of Econometric Society in China, Tsinghua University, Beijing, China, Jun 2023
Global AI Finance Research Conference, Singapore, Dec 2022
New Zealand Finance Meeting, University of Auckland, Online, Dec 2022
PhD Student Workshop, City University of Hong Kong, Online, Nov 2022
INFORMS Annual Meeting, Indianapolis, IN, U.S., Oct 2022
Conference on Information Systems and Technology (CIST), Indianapolis, IN, U.S., Oct 2022
Greater China Area Finance Conference, Xiamen University, Online, Jun 2022
ESSEC Business School, Dec 2023
University of Florida, Warrington College of Business, Dec 2023
University of Delaware, Lerner College of Business and Economics, Dec 2023
Bentley University, Dec 2023
University of Science and Technology of China, School of Management, Dec 2023
Stevens Institute of Technology, School of Business, Nov 2023
University of Warwick, Warwick Business School, Oct 2023