Does team competition increase pro-social lending? Evidence from online microfinance

We investigate the effects of team competition on pro-social lending activity on Kiva.org, the first microlending website to match lenders with entrepreneurs in developing countries. Using naturally occurring field data, we find that lenders who join teams contribute 1.2 more loans per month than those who do not. Furthermore, teams differ in activity levels. To investigate this heterogeneity, we run a field experiment by posting ∗We would like to thank Jim Andreoni, Vicki Bogan, Tilman Börgers, Betsy Hoffman, Nancy Kotzian, Erin Krupka, Yusufcan Masatlioglu, and seminar participants at Kiva, the National University of Singapore, Michigan, Tsinghua, the Wang Yanan Institute at Xiamen University, the 2011 International Meetings of the Economic Science Association (Chicago, IL), the 2013 Asia-Pacific Meetings of the Economic Association (Tokyo, Japan), and the 2013 Inequality Workshop at Tampere University for helpful discussion and comments, and Tyler Fisher and Roy Runyu Shi for excellent research assistance. We are grateful to Martin Butt and Webb Phillips for making the data dump available. The financial support from the National Science Foundation through grant no. BCS-1111019 is gratefully acknowledged. The research has been approved by the University of Michigan IRB. R. Chen: Department of Economics, Faculty of Arts and Social Science, National University of Singapore, AS2 Level 6, 1 Arts Link, Singapore 117570. Email: [email protected]. Y. Chen, Liu, and Mei: School of Information, University of Michigan, 105 South State Street, Ann Arbor, MI 48109-2112. Email: [email protected], [email protected], [email protected]