Herding behaviour in peer-to-peer lending: the elaboration likelihood during the COVID-19 crisis

Abstract

ABSTRACT North American consumers can usually act as borrowers or lenders using peer-to-peer (P2P) lending platforms to assess creditworthiness and mitigate information asymmetries on their own. However, as in many sectors, the COVID-19 crisis has also affected the finance industry. Overall, consumer decision-making on P2P lending platforms has changed dramatically resulting in a decrease in the number of transactions. P2P lending platforms can exploit people’s behavioural biases associated with hype whereas mediated information about COVID-19 crisis is beyond the control of these platforms. This research work aims at providing greater knowledge on how consumers build their decision-making under fuzzy information environment. A two-way ANOVA enables to strengthen this approach with data collected from a P2P lending platform between January 2019 and December 2020. This paper demonstrates that the elaboration likelihood model is a strong framework to explain consumer herding behaviour on online lending platforms.