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Financial literacy in for-profit vs pro-social peer-to-peer lending

Laura Gonzalez (Department of Finance, College of Business, California State University, Long Beach, California, USA)

Managerial Finance

ISSN: 0307-4358

Article publication date: 13 September 2022

Issue publication date: 26 January 2023




Peer-to-peer (P2P) lending facilitates direct online lending and aims to provide financial inclusion and investment returns. Lender goals range from for-profit to pro-social and objective information is limited, which highlights the need to examine heuristics.


This study examines 1,347 lending decisions by finance students on a mock P2P site. Testimonials were used to randomly condition the financially literate lenders towards for-profit or pro-social decision-making. Each investor evaluated three loans. The three loan applications were identical except for a female or male headshot (vs an icon) and random reports of 50% funding for the female or male loan in 3 days (vs 11 days for opposite gender and 7 for icon). Previous research surveys students on a mock platform (Gonzalez, 2020) and reports similar heuristics and lifelike decisions in student and general population samples (Gonzalez and Komarova, 2014).


Lenders randomly conditioned towards pro-social lending state lower trust in borrowers. However, pro-social investors state lower risk in P2P lending and higher financial literacy. Second, pro-social investors are more confident when lending to borrowers highly trusted by other lenders, especially if the popular loan applicant is female. Third, pro-social conditioning increases lending to male applicants when the popular loan applicant is female. Fourth, pro-social investors who have experienced financial trauma have greater confidence in bad loan recovery.


This is the first study of heuristics in pro-social vs for-profit P2P lending. In addition, it shows that testimonials can effectively condition lending goals and affect trust and risk perceptions.



Thanks to discussants and participants in 2021 Global Finance Conference and Southwestern Finance Association meetings for useful comments. A previous version of this manuscript referenced by Research Gate is available through Social Sciences Research Network.


Gonzalez, L. (2023), "Financial literacy in for-profit vs pro-social peer-to-peer lending", Managerial Finance, Vol. 49 No. 2, pp. 315-337.



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