Determinants of Investment Intentions in Peer-to-Peer Lending Platforms: Evidence from Malaysia’s Fintech Ecosystem
This study analyzes 361 Malaysian investors using the UTAUT and Technology Innovation Model to reveal that effort expectancy, perceived trust, and perceived time pressure significantly drive investment intentions in P2P lending platforms, whereas social influence and performance expectancy do not.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the vast landscape of modern finance, a quiet revolution is taking place where people lend money directly to one another, bypassing traditional banks. This system, known as peer-to-peer lending, acts as a digital marketplace where individuals can invest small amounts of money to help businesses grow, earning interest in return. For the borrowers, often small business owners who struggle to get loans from conventional banks, these platforms offer a lifeline. For the lenders, they offer a way to put their savings to work. However, for this ecosystem to thrive, it relies entirely on the willingness of ordinary people to click a button and send their money into the digital void. Understanding why someone decides to take that risk is the central puzzle researchers are trying to solve. To do this, scientists often look at how people accept new technology, examining whether a system is easy to use, if it seems useful, and if friends or family approve of it. They also consider how much a person trusts the system and how much pressure they feel to make a quick decision.
A team of researchers in Malaysia recently set out to understand exactly what drives these investment decisions within the country's rapidly growing fintech environment. They focused on the behavior of individual investors, asking what makes them feel confident enough to lend their money through online platforms. The researchers gathered data from 361 people who were either already investing or considering it, asking them detailed questions about their experiences and feelings toward these platforms. They looked at several specific factors: how easy the platform was to use, how much benefit the investor expected to gain, whether their social circle influenced them, how much they trusted the platform, and how much time pressure they felt when making a choice. The goal was to separate the factors that truly matter from those that might seem important but actually have little impact on a person's final decision.
The study revealed a surprising reality about what motivates investors. The researchers found that the ease of using the platform is a major factor, but only indirectly; when the process feels straightforward and intuitive, it shapes a person's positive perception, which then leads to the intention to invest. Trust proved to be equally critical. When investors feel that the platform is reliable, secure, and honest, their willingness to lend money increases significantly, both directly and by shaping their overall perception. Another unexpected finding was the role of time pressure. The data showed that when investors feel a sense of urgency or a deadline to act, it influences their perception of the platform, though the study noted that such pressure can lead to imprudent decisions due to insufficient time to consider all important data. These three elements—ease of use, trust, and the feeling of time pressure—were the primary drivers that shaped investor perception and, consequently, their intention to invest.
However, the study also ruled out several ideas that many might assume are powerful drivers. Contrary to what one might expect, the researchers found that the perceived usefulness of the platform, or the belief that it will deliver high returns, did not significantly influence the decision to invest. Similarly, social influence, or the pressure to invest because friends and family are doing it, had no measurable effect on a person's intention to lend money. In this specific context, people were not following the crowd, nor were they swayed solely by the promise of high performance. Instead, their decisions were rooted in their personal perception of the platform's usability and reliability, and the immediate pressure of the moment.
The researchers also discovered that a person's overall perception acts as a bridge between these factors and their final decision. For instance, the ease of using a site and the trust in the platform shape a person's general attitude, which then leads to the intention to invest. This means that even if a platform offers great returns, if the user interface is clunky or the company feels untrustworthy, the investor's attitude will turn negative, and they will likely walk away. The study suggests that to grow this market, platform operators should focus less on marketing the potential profits or trying to create social buzz, and more on building a seamless, trustworthy user experience. By making the technology simple and proving their integrity, these platforms can lower the barriers for investors, allowing more small businesses to access the capital they need to succeed.
Ultimately, this research provides a clear roadmap for the future of peer-to-peer lending in Malaysia and beyond. It suggests that the key to unlocking more investment lies in human psychology and design rather than just financial incentives. When regulators and platform creators prioritize transparency and user-friendly interfaces, they address the core concerns of the investors. The findings indicate that while the promise of profit is important, it is the daily experience of using the platform and the feeling of safety that truly determine whether a person will open their wallet. By focusing on these tangible elements, the financial ecosystem can become more inclusive, helping small businesses thrive while giving individuals a secure way to participate in the economy.
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