P2P lending: Moderation of desirability of control on risk-taking decisions of Indonesian borrowers

The number of users of peer-to-peer (P2P) lending applications in Indonesia continues to grow rapidly even though it is followed by increased cases of alleged criminal violations in the financial sector. Users continue to use these financial technologies despite being aware of the high risks and potential negative consequences they may receive. Meanwhile, the results of previous research in the context of financial technology show that the higher the risk perceived by users, the more discouraged they are from using financial technology. In addition, the number of studies that discuss decision-making at the user group level is still limited. Tests using the structural equation model (SEM) method showed that the desirability of control moderates the negative effect of perceived risk on P2P lending usage intention. The desirability of control is proven to weaken the effect of perceived risk on the intention to use P2P lending. As a result, borrowers with high desirability of control tend to ignore the high risk of using online lending providers so they will continue to take these actions. Meanwhile, borrowers with low desirability of control try to maintain their control by avoiding the use of P2P lending. In addition, the Bollen-Stine bootstrap procedure also showed that the model meets the goodness of fit even though the data was not normally distributed in multivariate analysis. The results of this study also imply that the government needs to formulate regulations to tighten lending procedures to minimize the potential for defaults on debt that harm the community and online lending providers.