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

We have witnessed the convenience of mobile channels and how they boost user engagement in multiple industries. Such positive effects might or might not stay with users’ financial behavior since it requires a significant cognitive effort and risk preferences could also alter the effect direction. Moreover, regarding their effects on two-sided platforms, prior 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 lenders’ behavior would be influenced by borrowers’ application quality and quantity. To bridge these gaps, we investigate how mobile channels shape the behaviors of both borrowers and lenders in peer-to-peer (P2P) lending platforms, as well as the corresponding impacts on credit risk management and economic return. Drawing upon the cognitive load theory, we postulate that borrowers and lenders under heavy and mild cognitive load would exhibit distinct behaviors when submitting loan applications or approving loan requests, respectively. Empirically, we collaborate with a leading P2P 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. By contrast, mobile lenders have a higher 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 capability of the platform, we reveal that mobile adoption brings profit enhancement. We offer multiple theoretical and managerial implications.