The Impact of Lender Trust on Re-Lending Intention: Empirical Evidence from Indonesian Peer to Peer Lending

Abstract

Peer-to-Peer (P2P) Lending is a new alternative financing solution in Indonesia that is conducted digitally through the internet which involves lenders, borrowers, and platform intermediaries. This study aims to explain the effect of lender trust on the re-lending intention on Indonesian peer-to-peer lending. This study applied a descriptive research design. 300 online respondents were collected followed by Structural equation modeling (SEM) for data analysis. This study focused on lenders who lent between July to December 2020 in the five biggest Indonesian productive peer-to-peer lending platforms. The study showed that trust in both the borrower and in the platform significantly impacted on the lender's intention to re-lend. This study also found moderating variables which significantly impacted lenders’ lending intention. To develop lenders’ trust, borrowers should provide good quality loan information, and the platform should run good quality service and sufficient security protection.

Keywords: Financial Technology, Lending intention, Trust, Trust in Borrower, Trust in Platform, Peer-to-peer lending, P2P Lending.