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Borrower Learning Effects: Do Prior Experiences Promote Continuous Successes in Peer-to-Peer Lending?

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Abstract

There are a large amount of studies on the impact of individual experience on learning outcome, which ignore the conditioning and implicitly assume that the learning behaviors are bound to arise. This study develops a two-stage conceptual model for the interpretation of individual learning, and aims to explore how individual’s prior experience affects the initiating of subsequent learning behavior first and then impacts the success of subsequent learning behavior. Using a large sample of loan application data over a five-year period from a Chinese P2P lending platform Renrendai, we found strong evidence that both prior successes and prior failures can motivate borrowers to take subsequent borrowing behaviors again. However, in regard to the impact of individual experience on learning outcome, our finding in online environment is contrary to the prevalent view in organizational learning—“we learn more effectively in failure than in success”. Specifically, we found only successes can lead to desirable success whereas failures can’t, which indicates that borrowers with failure experience are willing to repeat borrowing but unable to learn from their failures. Further, we find a beneficial interaction effect between borrower’s prior successes and prior failures on subsequent borrowing success. These results are robust across a variety of settings. Our study enriches the understanding of individual learning by focusing not only on outcome improvement but also on conditioning. Moreover, we investigate learning process in an online environment which is anonymous and lack of peer communication that offline organizations have, we draw some different findings. Our findings also offer practical insights for borrowers under financial difficulties and platform managers to correctly interpret prior experience and enhance the probability of subsequent funding success in P2P lending.

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Acknowledgments

This work is supported by the China MOE Project of Humanities and Social Science (17YJCZH022), the Major Program of National Fund of Philosophy and Social Science of China (18ZDA088), the National Social Sciences Foundation of China Project 19BGL260), and the National Natural Science Foundation of China (Grant Nos. 71572092, 61773248).

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Authors and Affiliations

  1. Department of Culture Management, Shanghai Publishing and Printing College, Shanghai, 200093, People’s Republic of China

    Qun Chen

  2. School of Management, Jilin University, Changchun, 1320022, People’s Republic of China

    Ji-Wen Li

  3. School of Accountancy and Institute of Accounting and Finance, Shanghai University of Finance and Economics, Room 824, Lab. Building, No. 777 Guoding Street, Shanghai, People’s Republic of China

    Jian-Guo Liu

  4. Institute of Fintech, Shanghai University of Finance and Economics, Room 825, Lab Building, No. 777 Guoding Street, Shanghai, People’s Republic of China

    Jian-Guo Liu & Jing-Ti Han

  5. School of Information Management and Engineering, Shanghai University of Finance and Economics, Shanghai, 200433, People’s Republic of China

    Jing-Ti Han & Yun Shi

  6. School of Economics and Management, Tsinghua University, Beijing, 100084, People’s Republic of China

    Xun-Hua Guo

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  1. Qun Chen
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Chen, Q., Li, JW., Liu, JG. et al. Borrower Learning Effects: Do Prior Experiences Promote Continuous Successes in Peer-to-Peer Lending?. Inf Syst Front 23, 963–986 (2021). https://doi.org/10.1007/s10796-020-10006-7

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