Influence of trust and risk on peer-to-peer investment willingness: a bidirectional perspective

The purpose of this paper is to investigate the influence of trust and perceived risk on investment willingness considering the bidirectional relationship between trust and perceived risk in peer-to-peer (P2P) lending.

Data were collected from a leading Chinese P2P platform, PPDAI.com. In total, 328 valid responses were received and analyzed using structural equation modeling (SEM).

The results show that the influence of trust on investment willingness is significant, whereas that of perceived risk is insignificant. The results also indicate that platform reputation has a positive effect on trust, and the quality of alternatives is positively associated with perceived risk. In addition, the bidirectional perspective should be preferred to cope with the bidirectional relationship between trust and perceived risk in P2P lending.

This study extends existing research on the influence of trust and perceived risk on investment willingness from a bidirectional perspective, which has not been addressed in the P2P lending context. In addition, this research enriches the current literature about trust and perceived risk by providing more evidence that the relationship between trust and perceived risk is bidirectional and thus the bidirectional model should be preferred. For practice, the study suggests that managers can earn trust and reduce the perceived risk of lenders by continuously providing high-quality products, services and enhancing platform reputation, ultimately improving their investment willingness.