Distrust in Banks and Fintech Participation : The Case of Peer-to-Peer Lending

What has boosted crowdfunding's growth? In the case of peer-to-peer (P2P) lending, we highlightthe role of consumers' distrust in banks. We offer evidence that distrust in banks likely triggersindividuals to supply funding toward crowdfunding and away from bank deposits. We highlightthat a distrust mindset promotes questioning default choices and considering alternatives, andfosters comparisons focusing on dissimilarities. Our findings suggest US states whose residentsexpress greater distrust in banks are more likely to fund P2P loans and, conditional on funding,lend higher amounts. This relationship is more pronounced when funding small loans or borrowerswith less banking access