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Prosocial Compliance in P2P Lending: A Natural Field Experiment

Ninghua Du (), Lingfang Li (), Tian Lu () and Xianghua Lu ()
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Ninghua Du: Key Laboratory of Mathematical Economics and School of Economics, Shanghai University of Finance and Economics, 200433 Shanghai, China;
Lingfang Li: School of Management, Fudan University, 200433 Shanghai, China
Tian Lu: School of Management, Fudan University, 200433 Shanghai, China; Heinz College, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Xianghua Lu: School of Management, Fudan University, 200433 Shanghai, China

Management Science, 2020, vol. 66, issue 1, 315-333

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.

Keywords: natural field experiment; P2P lending; prosocial compliance (search for similar items in EconPapers)
Date: 2020
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