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Does team competition increase pro-social lending? Evidence from online microfinance

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  • Chen, Roy
  • Chen, Yan
  • Liu, Yang
  • Mei, Qiaozhu

Abstract

We investigate the effects of team competition on pro-social lending activity on Kiva.org, the first microlending website to match lenders with entrepreneurs in developing countries. Using naturally occurring field data, we find that lenders who join teams contribute 1.2 more loans ($30-$42) per month than those who do not. To further explore factors that differentiate successful teams from dormant ones, we run a large-scale randomized field experiment (n = 22, 233) by posting forum messages. Compared to the control, we find that lenders make significantly more loans when exposed to a goal-setting and coordination message, whereas goal-setting alone significantly increases lending activities of previously inactive teams. Our findings suggest that goal-setting and coordination are effective mechanisms to increase pro-social behavior in teams.

Suggested Citation

  • Chen, Roy & Chen, Yan & Liu, Yang & Mei, Qiaozhu, 2014. "Does team competition increase pro-social lending? Evidence from online microfinance," Discussion Papers, Research Unit: Market Behavior SP II 2014-209, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbmbh:spii2014209
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    Cited by:

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    2. Liu, Aiping & Urquía-Grande, Elena & López-Sánchez, Pilar & Rodríguez-López, Ángel, 2023. "Research into microfinance and ICTs: A bibliometric analysis," Evaluation and Program Planning, Elsevier, vol. 97(C).
    3. Marie Claire Villeval, 2021. "Group Identity and Social Preferences (chapter X)," Post-Print halshs-03504316, HAL.
    4. Briscese, Guglielmo, 2019. "Generous by default: A field experiment on designing defaults that align with past behaviour on charitable giving," Journal of Economic Psychology, Elsevier, vol. 74(C).
    5. Zhiyuan Gao & Zhiling Guo & Qian Tang, 2022. "How do monetary incentives influence giving? An empirical investigation of matching subsidies on kiva," Information Systems and e-Business Management, Springer, vol. 20(2), pages 303-324, June.
    6. Reazul Islam & Rubi Ahmad, 2020. "Applicability of Mudarabah and Musharakah as Islamic Micro-equity Finance to Underprivileged Women in Malaysia," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 176-197, January.
    7. Aaron H. Anglin & Hana Milanov & Jeremy C. Short, 2023. "Religious Expression and Crowdfunded Microfinance Success: Insights from Role Congruity Theory," Journal of Business Ethics, Springer, vol. 185(2), pages 397-426, June.
    8. Jonathan Oxley, 2020. "Examining Donor Preference for Charity Religious Affiliation," Working Papers wp2020_01_01, Department of Economics, Florida State University.
    9. Marie Claire Villeval, 2021. "Group Identity and Social Preferences by Yan Chen and Sherry X. Li," Post-Print halshs-03504258, HAL.
    10. Chen, Josie I. & Foster, Andrew & Putterman, Louis, 2019. "Identity, trust and altruism: An experiment on preferences and microfinance lending," European Economic Review, Elsevier, vol. 120(C).
    11. Bauer, Kevin, 2020. "How did we do? The impact of relative performance feedback on intergroup hostilities," SAFE Working Paper Series 281, Leibniz Institute for Financial Research SAFE.

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    More about this item

    Keywords

    social identity; pro-social lending; microfinance; field experiment;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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