A trust model for online peer-to-peer lending: a lender’s perspective

Online peer-to-peer (P2P) lending is a new but essential financing method for small and micro enterprises that is conducted on the Internet and excludes the involvement of collateral and financial institutions. To tackle the inherent risk of this new financing method, trust must be cultivated. Based on trust theories, the present study develops an integrated trust model specifically for the online P2P lending context, to better understand the critical factors that drive lenders’ trust. The model is empirically tested using surveyed data from 785 online lenders of PPDai, the first and largest online P2P platform in China. The results show that both trust in borrowers and trust in intermediaries are significant factors influencing lenders’ lending intention. However, trust in borrowers is more critical, and not only directly nurtures lenders’ lending intention more efficiently than trust in intermediaries, but also carries the impact of trust in intermediaries on lenders’ lending intention. To develop lenders’ trust, borrowers should provide high-quality information for their loan requests and intermediaries should provide high-quality services and sufficient security protection. The findings provide valuable insights for both borrowers and intermediaries.