Psychological distancing and language intensity in Peer-to-Peer lending

Abstract

Peer-to-peer (P2P) lending is referred to as lending money to unknown borrowers directly through online platforms without using traditional financial intermediaries. We leverage insights from the literature on psychological distancing and affective intensity to argue that linguistic styles, as the manifestation of social psychological distance, have a negative impact on P2P funding success. Testing our arguments with data from a major Chinese P2P platform, we find that using too many “you” and negations (proxies for social psychological distance) in the borrower's description will dampen a lender's willingness to support a funding campaign. Moreover, when the social psychological distance is large, language intensity can be perceived as desperate, making a lender even less willing to support the funding campaign. Our research shed new light on the role of language in P2P funding success and has practical implications for lenders, borrowers and regulators in overcoming barriers in P2P lending.