Thanks to social media, an up-and-coming enterprise known as peer-to-peer (P2P) lending can skip the financial middleman and connect borrowers directly with lenders. The perks of P2P lending include lower interest rates for borrowers, higher returns for lenders, and increased access to loans for people who otherwise cannot get one.

“P2P lending is meant to mitigate financial exclusion by giving consumers access to funds that they might not otherwise have access to,” said Komarova, an assistant professor of marketing. “But we’re finding that despite these good intentions, some groups of people are actually excluded based on absolutely random factors.”

Study finds “some really quirky effects”

Komarova, whose research focuses on consumer behavior, teamed up with Gabelli colleague Laura Gonzalez, PhD, an assistant professor of finance, to find out how P2P investors make lending decisions.

Using a simulated P2P site (“Lendi”) that they created, Komarova and Gonzalez presented lenders with the profiles of potential borrowers. The profiles contained only as much information as real P2P sites include, which is typically a photo of the borrower, loan size and maturity, classification of loan purpose, borrower credit rating, and an explanation of why the money is needed.

The pair found that in the absence of the extensive background information that banks collect about potential borrowers, P2P lenders tended to rely on certain personal factors, such as age, to guide their decisions. For instance, lenders tended to give less money to younger borrowers than to older borrowers, simply based on perceived life experience.

However, when it came to middle-aged people, for whom life experience was not as clear-cut of a determinant, Komarova and Gonzalez found that lenders relied on “some really quirky effects.”

They found that female lenders were less likely to loan money to an attractive woman (a phenomenon termed the “beauty is beastly” effect) and male lenders were less likely to loan money to a financially or professionally successful man with an outstanding credit rating—even if these borrowers were equally or more qualified than their less attractive and successful counterparts, respectively.

But when the sexes were reversed—women loaning to men and men loaning to women—the attractiveness and status effects disappeared.

“It’s not just about attractiveness, though—there’s something more operating there,” said Komarova, who as a marketing scholar also has extensive training in psychology. “These decisions are subconscious, even evolutionarily-based.”

Innate competitiveness drives decisions

According to Komarova, these psychological quirks stem from the competitiveness written into our DNA. Men perceive successful men as a potential threat, as do women vis-à-vis other attractive women. Even though we may rationally know that this is not true, we nonetheless experience a subconscious slump in confidence when we encounter our primitive rivals.

Unfortunately for the potential borrower, the momentary slump in confidence that the lender feels gets misjudged as a bad “gut feeling” about the borrower’s application. This becomes even more relevant if the lender is wading through numerous applications, because he or she relies more on those initial “gut feelings” to speed up the decision process.

“In the absence of objective information [or in a time crunch], visceral reactions often guide our decisions—that is, that immediate sense of this ‘feels right’ or ‘feels wrong,’” she said. “However, these intuitions about this borrower can be based on completely random factors.”

Komarova and Gonzalez published papers on their findings in two prominent journals, the International Journal of Bank Marketing and the Journal of Behavioral and Experimental Finance. The next leg of the research will examine whether organizations that use P2P platforms demonstrate similar quirks when screening potential borrowers as compared to individual lenders.

“We’re hoping this research can educate P2P platform users not only to protect companies, investors, and borrowers, but also to help shape public policy and support these platforms so that everyone’s rights and opportunities are maximized,” Komarova said.

Aditi Bagchi,

associate professor of law, LAW,

“ESPN Accused in Dish Case of Giving Comcast Better Terms,” Bloomberg, February 11

Tom Beaudoin, Ph.D.,

associate professor of practical theology, GRE,

“Woodford and the Quest for Meaning,” ABC Radio, February 16

Mary Bly, Ph.D.,

professor of English, A&S,

“How do Bestselling Novelists Court Cupid on Valentine’s Day?,” Washington Post, February 14

James Brudney,

professor of law, LAW,

“Nutter Seeks High Court’s OK to Impose His Terms on City Workers,” Philly.com, March 1

Charles C. Camosy, Ph.D.,

assistant professor of theology, A&S,

“Drone Warfare Faces Barrage of Moral Questions,” Catholic San Francisco, February 20

Colin M. Cathcart, M.F.A.,

associate professor of architecture, A&S,

“New York City Traffic Ranked the Worst Among the Nation: Study,” AM New York, February 6

Saul Cornell, Ph.D.,

The Paul and Diane Guenther Chair in American History, A&S,

“After Newtown: Guns in America,” WNET-TV, February 19

Carole Cox, Ph.D.,

professor of social service, GSS,

“Boomer Stress,” Norwich Bulletin, February 19

George Demacopoulos, Ph.D.,

associate professor of theology, A&S,

“Pope Resignation,” ABC, World News Now, February 28

Christopher Dietrich, Ph.D.,

assistant professor of history, A&S,

“Bad Precedent: Obama’s Drone Doctrine is Nixon’s Cambodia Doctrine (Dietrich),” Informed Comment, February 11

John Entelis, Ph.D.,

professor of political science, A&S,

“John Brennan,” BBC Radio, February 9

Howard Erichson,

professor of law, LAW,

“High-Stakes Trial Begins for 2010 Gulf Oil Spill,” Amarillo Globe-News, February 25

Laura Gonzalez, Ph.D.,

assistant professor of finance, BUS,

“Recortes al Presupuesto Podrían Afectar el Seguro Social y Medicare,” Mundo Fox, February 8

Albert Greco, Ph.D.,

professor of marketing, BUS,

“Why Would Anyone Want to Buy a Bookstore?,” Marketplace, February 25

Karen J. Greenberg, Ph.D.,

director of the Center on National Security, LAW,

“Alleged Sept. 11 Plotters in Court, but Lawyers Do the Talking,” National Public Radio, February 11

Stephen R. Grimm, Ph.D.,

associate professor of philosophy, A&S,

“Grants from Foundations and Corporations of More Than $100,000 in 2013,” Chronicle of Philanthropy, February 28

Tanya Hernandez, Ph.D.,
professor of law, LAW,

“Brazil’s Affirmative Action Law Offers a Huge Hand Up,” Christian Science Monitor, February 12

J. Patrick Hornbeck, Ph.D.,

assistant professor of theology, A&S,

“Vatican Conclave,” Huffington Post, March 4

Robert Hume, Ph.D.,

associate professor of political science, A&S,

“USA: Supreme Court Case Update – DOMA/Prop 8 Briefs Streaming In,” Gay Marriage Watch, February 28

Clare Huntington,

associate professor of law, LAW,

“Sunday Dialogue: How to Give Families a Path Out of Poverty,” The New York Times, February 9

Nicholas Johnson,

professor of law, LAW,

“Neil Heslin, Father of Newtown Victim, Testifies at Senate Assault Weapons Ban Hearing,”Huffington Post, February 27

Michael E. Lee, Ph.D.,

associate professor of theology, A&S,

“Tiempo: Watch this Week’s Show,” WABC 7, February 17

Joseph T. Lienhard, S.J.,

professor of theology, A&S,

“Remembering Benedict — the Teacher, the Traditionalist,” The Saratogian, March 1

Dawn B. Lerman, Ph.D.,

director of the Center for Positive Marketing, marketing area chair, and professor of marketing, BUS,

“Study: Google, Facebook, Walmart Fill Consumer Needs,” Tech Investor News, February 12

Paul Levinson, Ph.D.,

professor of communication and media studies, A&S,

“Will Oscar Host Seth MacFarlane Be Asked Back? Probably Not,” Yahoo! News via Christian Science Monitor, February 26

Hector Lindo-Fuentes, Ph.D.,

professor of history and director of Latin American and Latino Studies, A&S,

“Escaping Gang Violence, Growing Number of Teens Cross Border,” WNYC, December 28

Timothy Malefyt, Ph.D.,

visiting associate professor of marketing, BUS,

“On TV, an Everyday Muslim as Everyday American,” The New York Times, February 8

Elizabeth Maresca,

clinical associate professor of law, LAW,

“Poll: 87 Percent Say Never OK to Cheat on Taxes,” KWQC, February 26

Carlos McCray, Ed.D.,

associate professor of education leadership, GRE,

“Cops Nab 5-Year-Old for Wearing Wrong Color Shoes to School,” Take Part, January 18

Micki McGee, Ph.D.,

assistant professor of sociology, A&S,

“Do Self-Help Books Work?,” Chicago Sun Times, February 21

Mark Naison, Ph.D.,

professor of African and African American Studies and history, and principal investigator of the Bronx African American History Project (BAAHP), A&S,

“Professor: Why Teach For America Can’t Recruit in my Classroom,” Washington Post, February 18

Costas Panagopoulos, Ph.D.,

associate professor of political science, A&S,

“Analysis: Obama to Republicans – Can We Just Move On?,” WHTC 1450, February 13

Kimani Paul-Emile,

associate professor of law, LAW,

“Some Patients Won’t See Nurses of Different Race,” Cleveland Plain Dealer via AP, February 22

Michael Peppard, Ph.D.,

assistant professor of theology, A&S,

“Big Man on Campus isn’t on Campus,” Commonweal, February 20

Francis Petit, Ed.D.,

associate dean and director of Executive Programs, BUS,

“Marissa Mayer Takes Flak for Gathering Her Troops,” E-Commerce Times, March 1

Rose Perez, Ph.D.,

assistant professor of social work, GSS,

“Education Segment,” Mundo Fox, January 21

Wullianallur “R.P.” Raghupathi, Ph.D.,

professor of information systems, BUS,

“¿Qué Tiene Silicon Valley para Producir ‘Frutos’ Como Steve Jobs?,” CNN, February 24

Joel Reidenberg, Ph.D.,

Stanley D. and Nikki Waxberg Chair and professor of law and founding academic director of the Center on Law and Information Policy, LAW,

“Google App Store Policy Raises Privacy Concerns,” Reuters, February 14

Erick Rengifo-Minaya, Ph.D.,

associate professor of economics, BUS,

“Noticias MundoFOX 10PM Parte II,” Mundo Fox Noticias, February 8

Patrick J. Ryan, S.J.,

The Laurence J. McGinley Professor of Religion and Society, A&S,

“Pope Resignation,” WNBC, Sunday “Today in NY,” March 13

Susan Scafidi,

professor of law, LAW,

“Diamonds: How $60B Industry Thrives on Symbolism,” CBS This Morning, February 21

Christine Janssen-Selvadurai, Ph.D.,director of the entrepreneurship program at the Gabelli School of Business and co-director of both Fordham’s Center for Entrepreneurship and the Fordham Foundry, BUS,

“NYC Embraces Silicon Valley’s Appetite for Risk,” Crain’s New York Business, February 6

Ellen Silber, Ph.D.,

director of Mentoring Latinas, GSS,

“Mentoring Program Serves Young Latinas Aiming Higher in New York City,” Fox News Latino, February 25

Janet Sternberg, Ph.D.,assistant professor of communication and media studies, A&S,

“What are You Supposed to Do When You Have, Like, 106,926 Unread Emails?,” Huffington Post, February 25

Maureen A. Tilley, Ph.D.,professor of theology, A&S,

“Pope Resignation: Interview with Maureen Tilley of Fordham University,” WPIX, February 17

Terrence W. Tilley, Ph.D.,

Avery Cardinal Dulles, S.J., Professor of Catholic Theology and chair of the department, A&S,

“As Conclave to Select New Pope Begins, English-Speaking Cardinals Lead Charge to Reform Vatican,” Daily News, March 4

Peter Vaughan, Ph.D.,dean of the Graduate School of Social Service, GSS,

“Ceremony Held for NASW Foundation Award Recipients,” Social Work Blog, February 28

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As part of her doctoral research, she examined how banks made loans to private tech firms during the dot.com bubble of the late 1990s. She concluded that banks were good at screening the potential of their high-risk borrowers before their initial public offerings (IPOs). She also studied loans made to public firms; even though most public firms have bank loans, the market still shows surprise and welcomes press announcements of those loans.

With her research grant, Gonzalez will look at bank loans during the recent lending bubble of 2005 to 2008, and examine the effect on the financial press and capital structure across industries.

According to prior evidence, banks gather and produce information on each approved loan candidate. This “positive-private” analysis is much like a letter of recommendation in the financial market.

“It’s positive because it means that the banks see potential in you,” Gonzalez said. “And it’s private because only the lending banks really know that information.”

Gonzalez will ask the question: When the financial press reported on the waves of bank loans during the recent aggressive lending bubble, was it “caught in the bubble?”

“The Fed and other regulators’ roles in the current crisis are under scrutiny, and credit agencies—to satisfy a pool of investors that needed safe labeling—were excessively positive in their assessments,” Gonzalez said.