Trust in Crowdlending: Do Lenders Value Profit, Safety or Platform Quality?

Crowdlending has enabled small businesses to borrow capital while lowering transaction costs and improving access to finance. While these trends are promising, little attention has been paid to evaluating and strategizing the trust-building capabilities of the platform for lenders in the information systems literature (IS). Crowdlending platforms rely solely on the information provided by borrowers to evaluate loan requests. Reliance on such information could influence lenders' behavior, investment decisions, and returns. This study aims to develop a more comprehensive model to understand what elements and factors influence trust formation in crowdlending. We develop our model based on social and economic exchanges and technological considerations. Our results suggest that lenders are likely to pay more attention to platform quality and risk mitigation than to the attractive loan features. This research can help the crowdlending industry increase its investor base and make it easier for potential customers to access capital. In addition, these findings could also be beneficial when it comes to establishing regulatory guidelines for the crowdlending market.