How accounts shape lending decisions through fostering perceived trustworthiness

We examine the roles of social accounts in influencing lenders' decisions about loaning money to borrowers. Using field data and a laboratory experiment, we show that lenders will lend money depending on the accounts borrowers tell. In Study 1, field data from a peer-to-peer lending website reveal that two-account combinations (explanation-acknowledgment and explanation-denial) increase the likelihood of favorable lending decisions. A laboratory study helps explain the important role of accounts by unpacking the process of perceived borrower trustworthiness in lending decisions. A final field study assessing the performance of loans 2 years after origination shows that accounts, despite having a positive effect on the loan decision process, negatively predict loan performance. Collectively, the three studies show that accounts facilitate economic exchanges between unacquainted transaction partners because of their role in increasing perceived trustworthiness, but that ironically, accounts can negatively relate to loan performance.