Prosocial Compliance in P2P Lending: A Natural Field Experiment
Ninghua Du, Lingfang Li, Tian Lu, Xianghua Lu
Management Science · 2020 · Volume 66 · Issue 1
Abstract
We implement behavioral mechanisms in a natural field experiment to increase loan repayment rates on a peer-to-peer (P2P) lending website. The results show that text message reminders that convey lenders’ positive expectations considerably increase the likelihood that borrowers will repay their loans, whereas reminders emphasizing the adverse consequences of failure to repay loans do not have enduring effects. Our experiment results in an increase in loan repayments in the sample period. In addition, our reminders are cost-free to implement, showing the potential importance of such interventions in enhancing prosocial compliance in P2P lending. This paper was accepted by John List, behavioral economics.
Keywords
natural field experiment, P2P lending, prosocial compliance
Enable JavaScript for citation tools and additional paper interactions.