Paper ID

3058

Paper Type

short

Description

With the development of FinTech, more and more individuals are entitled to participate in financial activities, but little is known about whether they are well-equipped to make the right decisions and thus benefit from financial services. Especially, financial products and services are often perceived to be complex. Therefore, financial literacy (i.e. individuals’ ability to process economic information and make informed decision) plays a key role. In this study, we collaborate with a large P2P platform and innovate the measurement of financial literacy. Rather than assessing financial literacy through survey questions, we measure it by observing individuals’ actual decisions made on personal credit on the platform. Our preliminary results demonstrate the importance of financial literacy for both borrowing and investment in online P2P lending. Our study contributes to the nascent IS literature on FinTech, and provides practical insights for P2P lending platform owners and policy makers.

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The Role of Financial Literacy in Online Peer-to-Peer Lending: An Empirical Approach

With the development of FinTech, more and more individuals are entitled to participate in financial activities, but little is known about whether they are well-equipped to make the right decisions and thus benefit from financial services. Especially, financial products and services are often perceived to be complex. Therefore, financial literacy (i.e. individuals’ ability to process economic information and make informed decision) plays a key role. In this study, we collaborate with a large P2P platform and innovate the measurement of financial literacy. Rather than assessing financial literacy through survey questions, we measure it by observing individuals’ actual decisions made on personal credit on the platform. Our preliminary results demonstrate the importance of financial literacy for both borrowing and investment in online P2P lending. Our study contributes to the nascent IS literature on FinTech, and provides practical insights for P2P lending platform owners and policy makers.