Mobile Effects on Interrelated Two-Sided Financial Decisions: Comprehensive Evidence from Field Experiments on Peer-to-Peer Lending Platforms

39 Pages Posted: 19 Apr 2023 Last revised: 4 Mar 2024

See all articles by Sihan Fang

Sihan Fang

Nanyang Business School, NTU

Hyeokkoo Eric Kwon

Nanyang Business School, Nanyang Technological University, Singapore

Tian Lu

Department of Information Systems, Arizona State University

Yingjie Zhang

Peking University - Guanghua School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 3, 2024

Abstract

We have witnessed the convenience of mobile channels and how they boost user engagement in multiple industries. Such positive effects might or might not be observed for financial behavior because the significant cognitive effort solicited and risk preferences invoked could alter the extent and direction of the effect. Furthermore, in terms of their effects on two-sided platforms, previous studies have focused on the decision-making of one single side. This might bias our understanding of mobile channels, especially in the finance sector, where borrower and lender behaviors are interrelated. This suggests that quality and quantity on one side can impact decision-making processes on the other side. To bridge these gaps, we investigate how mobile channels shape the behaviors of both borrowers and lenders in the context of peer-to-peer lending platforms. We also examine the corresponding impacts on credit risk management and economic returns. Integrating cognitive load theory and other confounding factors from the interrelated two-sided behavior, we anticipate how borrowers and lenders make decisions regarding the interconnected tasks of loan submission, approval, and repayment. To establish an empirical basis, we collaborate with a leading peer-to-peer lending platform to launch two-sided field experiments, in which we randomly assign mobile treatments to borrowers and lenders. The results illustrate that mobile borrowers are more likely to terminate loan submissions, especially during peak commuting hours. Meanwhile, mobile lenders demonstrate a greater tendency to approve loan applications within a shorter period. Surprisingly, we observe no change in the quality of submitted or approved loans. Considering the improved debt collection capabilities afforded the platform by the mobile channel, we recognize that mobile adoption enhances profit. We conclude by presenting multiple theoretical and managerial implications.

Keywords: mobile adoption; cognitive load theory; credit risk management; peer-to-peer lending; two-sided behavior; field experiment

Suggested Citation

Fang, Sihan and Kwon, Hyeokkoo Eric and Lu, Tian and Zhang, Yingjie, Mobile Effects on Interrelated Two-Sided Financial Decisions: Comprehensive Evidence from Field Experiments on Peer-to-Peer Lending Platforms (March 3, 2024). Available at SSRN: https://ssrn.com/abstract=4413640 or http://dx.doi.org/10.2139/ssrn.4413640

Sihan Fang

Nanyang Business School, NTU

Hyeokkoo Eric Kwon

Nanyang Business School, Nanyang Technological University, Singapore ( email )

S3 B2B-71, 50 Nanyang Avenue
Singapore, 639798
Singapore

HOME PAGE: http://sites.google.com/view/erickwon/

Tian Lu

Department of Information Systems, Arizona State University ( email )

Tempe, AZ 85287
United States

HOME PAGE: http://isearch.asu.edu/profile/tianlu1

Yingjie Zhang (Contact Author)

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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