Building investor trust in the P2P lending platform with a focus on Chinese P2P lending platforms

Abstract

As massive Chinese P2P platforms have failed dueto moral risk and liquidity risk, which decreased investorsconfidence in P2P lending, the major question facing the futuregrowth of P2P platforms is how to best build investors trust. This study was based on the elaboration likelihood model andexamines how to persuade investors to develop initial trust inP2P platform. The empirical analysis results support the financialand credit status of P2P platforms are key elements in buildingthe trust of investors. The social capital, risk management, andoperating duration provide the necessary support to increase thenumber of platform investors. The average interest rate and thedisclosure of information by the borrowers does not significantlyaffect the number of platform investors. These findings willfacilitate future development efforts for p2p lending and therational investments of investors.