Peer-Reviewed Article

Jurnal Keuangan dan Perbankan

Volume 25, Issue 4 2021, page. 787 - 803
ISSN: 1410-8089 (Print), 2443-2687 (Online)
DOI: 10.26905/jkdp.v25i4.6352

The Investment Intention Among Indonesian

Millennials via Peer-to-Peer Lending Applications
Nandike Ayudiah Poeteri1, Megawati Simanjuntak2, Nur Hasanah3
1,3Department of Management and Business, Business School, IPB University, Indonesia
2Department of Family and Consumer Sciences, Faculty of Human Ecology, IPB University,
Indonesia
*Corresponding Author: nandikeayu@gmail.com

Abstract
This study analyzes the factors influencing millennial investment intentions via Peer-to-
Peer (P2P) lending applications through trust and perceived risk. This research was
conducted by respondents who were selected using non-probability sampling, with the
criteria that they had never used a P2P lending application and were born in 1982 to 2000.
An online questionnaire gathered the data analysis using Structural Equation Modeling
(SEM) with LISREL. The study results found that perceived reputation, perceived
structural assurance, and trust had a significant effect on perceived risk. In contrast,
financial literacy and perceived information quality are not. Next, relative advantage
perceived reputation and perceived information quality significantly affect trust.
Meanwhile, perceived structural assurance is not. Furthermore, perceived risk and trust
have a significant effect on investment intention. However, perceived risk is more vital in
mediating investment intention via P2P lending than trust. The organizers have discussed
the managerial implications to consider increasing the number of potential investors,
especially the millennial generation.
Keywords: Investment intention; Millennials; P2P lending; Perceived risk; Trust
JEL: G20, G41, O33
This is an open-access article under the CC–BY-SA license.

1. INTRODUCTION
The rapid growth of financial technology in Indonesia illustrates a new trend in
modern financial services primarily aimed at financial purposes: peer-to-peer (P2P)
lending. P2P lending plays a role as alternative financial media, providing solutions for
specific borrowers with limited access to conventional bank loans and allowing
communities to diversify an investment portfolio through a funding mechanism with an
attractive return. Enthusiasm for this latest financial technology innovation can be seen
from the number of P2P lending organizers in Indonesia reaching 149 registered entities,
and the number of borrowers grew by 134.59% yoy. However, the number of investors only
grew by 18.32% yoy (OJK, 2020). There are still P2P lending applications that haven't met
the borrower's funding needs before the specified time limit.

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Nowadays, the millennial generation is turning into the productive age who are
predicted to be independent in financial. Millennials have the characteristics of being
willing to take risks to make investment decisions and are often characterized by being
comfortable with technology (Onasie & Widoatmodjo, 2020). Based on the Jakpat survey in
2018, there is a tendency that millennials are getting interested in investing using financial
technology. Millennials prefer and can support and store their wealth efficiently using the
most accessible financial services. There are possibilities for P2P lending applications to
gain more attention from the millennial generation as an alternative investment.
Uncertainty in investing through P2P lending applications is the same as investing in
other instruments. The return on investment will be even greater if it is associated with
high-risk transactions. Therefore, understanding knowledge about investment will support
confidence to manage personal finances through proper planning. Someone with adequate
financial literacy tends to participate in investment activities (Allgood & Walstad, 2016).
Furthermore, the investment mechanism in P2P lending tends to be unique because it
involves two parties who do not meet directly, including investors and borrowers.
Investors assess the risk of loans to be invested only through online information channels.
As a result, trust plays an essential role in accommodating transactions.
AFTECH (2020) concluded that consumer protection is an essential issue in the use
of P2P lending, especially transparency, reliability, fair treatment, fast dispute resolution,
data privacy, and security. The initial introduction to P2P lending applications is related to
the credibility of the instrument in meeting investment expectations. In this case, reputation
becomes the basis of reference in the community to understand the provider's reliability,
especially for investors who do not have an experience that will depend on the reputation
of P2P lending applications (Wang et al., 2014; Wei et al., 2017). Furthermore, information
transparency is essential in P2P lending applications. The investment process in P2P
lending is entirely online and allows for information asymmetry. Information quality is
needed to reduce investment uncertainty. Especially in the online environment, the quality
of information is essential in influencing consumer choices (Ghasemaghaei & Hassanein,
2016). In the final evaluation, investors will think about various kinds of risks. Digital
elements in fintech services may cause concerns in their use. Structural assurance is needed
to ensure protection and security in conducting transactions in helping investors to
overcome anxiety about potential losses (Wang et al., 2019).
To gain potential investors is to encourage the millennial generation's intention to
invest using P2P lending applications. As the latest investment instrument innovation, we
employed the perceived characteristic of the innovation model as the theoretical
foundation for forming intentions (Moore & Benbasat, 1991). One of these criteria is the
relative advantage, where innovation is more beneficial than its predecessor. P2P lending
is a technology-based lending and borrowing service other than conventional banks. They
offer various benefits, including a better level of investment, ease of processing, real-time,
and speed of service (Milne & Parboteeah, 2016). Furthermore, investment intentions in
consumer behavior will determine how retail investors decide to invest. Someone who
chooses to invest is willing to accept investing risk and has more confidence (Kurniawan,
2021). Maziriri et al. (2019) found that perceived risk and Investor' trust could control
investment intentions through the online trading platform. The risk factors can pose a
challenge to consider using financial technology. In contrast, building trust in transaction
facilities is one form of reducing users' perceived risk. Trust issues become very important
to describe the level of risk (Zhou, 2014).

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This study is concerned with understanding the millennial generation's behavior

towards using the P2P lending application to determine how to increase investment
intention with a lending mechanism. So the potential Investor can minimize the gap
between the number of investors and borrowers and affect the growth in the lending
volume. We explore the factors that encourage millennials to invest in P2P lending
applications from the perspective of perceived risk and trust in mediating financial literacy,
relative advantage, perceived reputation, perceived structural assurance, and perceived
information quality on investment intentions using P2P lending applications. Hopefully,
the results of this study can provide organizers with a new perspective on the intention to
invest in P2P lending, especially the millennial generation.
2. HYPOTHESES DEVELOPMENT
Investment Intention
The intention is a motivating factor that will affect efforts to carry out a behavior
(Ajzen, 1991). Furthermore, the intention as control of the action will be realized in various
forms if there is a suitable time and opportunity. The intention will become behavior until
the option is appropriate. Behavioral purposes require consistency in target, action,
situation, and time. According to Sashikala & Chitramani (2018), deciding to invest is based
on motivational factors and an investor's efforts to take specific actions. The reasons for an
investor to invest are referred to as investment intentions.
Perceived Risk
Perceived risk is the individual risk that needs to be addressed due to uncertainty
and loss of opportunity in pursuing a service's expected gain (Featherman & Pavlou, 2003).
Perceived risk can be the basis to apprehend the user's behavior in facing the risk. If the
expected loss is significant, a consumer will have to deal with a higher risk (Ariffin et al.,
2018). Several studies have identified perceived risk dimensions, each of which will vary
according to products or services. These dimensions include performance risk, social risk,
financial risk, privacy risk, and time risk (Featherman & Pavlou, 2003). In the P2P lending
context, perceived risk is a form of subjective perception of the various risks associated with
the application for investment.
Trust
Trust refers to the individual's level of trust that the other party has a beneficial
characteristic in pursuing a goal (McKnight & Chervany, 2001). The trust concept covers
three consumer beliefs about whether the other party has integrity, benevolence, and the
ability to meet consumers' expectations. Integrity means that the organizers follow moral
and ethical principles, and benevolence implies that the organizers have good intentions.
Ability implies that the organizers have the skills and competencies needed to fulfill their
duties (Yang et al., 2015). Uncertainty and risk exist when conducting online transactions.
The involvement of user trust in the investment intention via P2P lending application is
expected to decrease tension.

Financial Literacy
Financial literacy is related as an individual understands financial concepts and can
manage personal finance by considering the living and economic situation (Remund, 2010).
Not every recent financial service is easily understandable, specifically for investors with
minimal financial experience. Financial literacy loss is related to incorrect financial
misconduct in investing, financing debt, and making plans on long-time period pension,

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which altogether decreases one's well-being (Chu et al., 2016). Thus, financial literacy might
also affect investors' perceived investment risk.
Relative Advantage
Relative advantage is one characteristic that innovation appears to have more benefits
than the concept it replaces (Moore & Benbasat, 1991). The P2P lending application is one
of the newest forms of financial service innovation based on technology elements. The
increasing development of the P2P lending application can provide benefits that other
financial services cannot obtain. The use of the P2P lending application offers various
advantages, including a better level of investment, ease of processing, and speed of service
(Milne & Parboteeah, 2016). Therefore, more favorable benefits will contribute to trust in a
service (Koufaris & Hampton-Sosa, 2004).
Perceived Reputation
Perceived reputation is how the Investor will trust application characters and
subsequently acknowledge its descent competency and integrity. Reputation is determined
based on the accumulated assessment driven by observation and experience with the
services provider (Sánchez-Alzate & Sánchez-Torres, 2017). The reputation can be judged
as essential in credibility assessment and can increase the recognition of P2P lending
applications. An individual with no experience to invest via a P2P lending application is
presumed to behave in line with the platform's reputation (Wang et al., 2014). In addition,
Ong & Chan (2016) stated that a positive reputation could indicate a level of trust and
anticipate perceived risk on financial applications.
Perceived Structural Assurance
Perceived structural assurance refers to how much reliability an investor
acknowledges on an application with technology and legal protection structure, which
helps to assure safe transaction (Zhou, 2014). The structural assurance availability, such as
technical encryption policy, insurance, regulation, law structure, and guarantee, plays a
vital role in sustaining users' perceived safety in financial transactions using P2P lending
applications (Wang et al., 2015). It is necessary for financial services that adopt technology
information for its use. Therefore, structural assurance is needed to control the risk and
gain investors' trust in technology (Bock et al., 2012).
Perceived Information Quality
Perceived information quality refers to Investor's perception in accessing accurate
and complete information (Zhang et al., 2014). P2P lending is known for its potency to
arrange a meeting between the Investor and borrower. Information availability plays a vital
role in influencing consumers' decisions (Ghasemaghaei & Hassanein, 2016). To minimize
the risk, investors will look for the most accurate information about the borrower candidate
(Chen et al., 2015). This information will mitigate the risk of asymmetrical information
while simultaneously increasing the self-confidence in the investment via the P2P lending
application.
The Effect of Financial Literacy on Perceived Risk
According to Aren & Zengin (2016), the relation between perceived risk and financial
literacy will affect the investment possibilities of each Investor. An investor with excessive
financial literacy gets better investment returns than people with low literacy. Samsuri et
al. (2019) additionally said that people with good financial literacy tend to tolerate the risk
and are willing to invest. Meanwhile, perceived risk is essential in mediating financial
literacy in investment decisions at the stock market (Waheed et al., 2020). Based on these
conditions, the proposed hypothesis is:

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H1: Financial literacy has a negative and significant effect on perceived risk.
The Effect of Relative Advantage on Trust
According to Koufaris & Hampton-Sosa (2004), comfort, convenience, and benefits
will build trust in a service. Kim et al. (2009) contend that relative advantage can affect the
trust of mobile banking use. Similar findings stated by Chen & Wang (2016) point out that
relative advantage positively and significantly increases the trust in social commerce use.
Furthermore, in P2P lending, comparative advantage can attract individuals to use the
application (Syarifah et al., 2020). Based on these conditions, the proposed hypothesis is:
H2: Relative advantage has a positive and significant effect on trust.
The Effect of Perceived Reputation on Perceived Risk and Trust
Several previous research has proven that perceived reputation can affect perceived
risk and trust in using technology. Sipangkar & Wijaya (2020) and Li et al. (2016) found that
perceived reputation can negatively and significantly affect perceived risk when using the
P2P lending application. Moreover, perceived importance also substantially impacts trust
using financial technology, including mobile payment applications (Shao & Zhang, 2018)
and P2P lending applications (Li et al., 2016). Based on these conditions, the proposed
hypothesis is:
H3: Perceived reputation has a negative and significant effect on perceived risk.
H4: Perceived reputation has a positive and significant effect on trust.
The Effect of Perceived Structural Assurance on Perceived Risk and Trust
According to McKnight & Chervany (2001), protection by structural assurance could
assure the consumer to use the technology. In addition, there are efforts in the form of
protection to reduce investor risk when transacting in P2P lending. The initial research
results show that perceived structural assurance significantly positively impacts investors'
trust within the P2P lending application (Chen et al., 2014; Wang et al., 2014; Yang & Lee,
2016). Furthermore, perceived structural assurance could negatively and significantly
affect investors' perceived risk of the P2P lending application (Li et al., 2016; Wang et al.,
2014). Based on these conditions, the proposed hypothesis is:
H5: Perceived structural assurance has a negative and significant effect on perceived risk.
H6: Perceived structural assurance has a positive and significant effect on trust.
The Effect of Perceived Information Quality on Perceived Risk and Trust
The availability of information can help potential investors better understand the risk
profile of borrowers. Having information on prospective borrowers can help reduce
information asymmetry and increase confidence in investing in P2P lending applications.
The previous research by Chen et al. (2015) and Puteri et al. (2019) contend that perceived
information quality negatively influences perceived risk. At the same time, perceived
information quality has positively influenced trust in P2P lending applications. Those
findings emphasize that perceived information quality in P2P lending is crucial in affecting
the Investor's risk perception and trust in a borrower. Based on these conditions, the
proposed hypothesis is:
H7: Perceived information quality has a negative and significant effect on perceived risk.
H8: Perceived information quality has a positive and significant effect on trust.

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The Effect of Trust on Perceived Risk

The effect of trust on risk has been empirically proven to be a factor that influences
individual behavior in an internet environment (Wang et al., 2016). Malaquias & Hwang
(2016) confirm that trust will affect perceived risk consumers' use of financial services.
Meanwhile, Al-Jabri (2015) reveals that trust significantly influences the risk associated
with mobile banking. Yosita & Giri (2016) also prove that individual trust levels
significantly and negatively affect perceived risk levels in internet banking. Based on these
conditions, the proposed hypothesis is:
H9: Trust has a negative and significant effect on perceived risk.
The Effect of Perceived Risk and Trust on Investment Intention
Before deciding to invest, investors can consider some risks. If they are willing to take
risks, they will choose to invest (Ademola et al., 2019). Yang et al. (2017) explain that
perceived risk is negatively related to investors' investment intention via a P2P lending
application. Besides that, trust is also a critical factor affecting investors' preference to invest
through crowdfunding platforms (Kang et al., 2016). In addition, lack of trust will decrease
the decision to invest in the stock exchange (Bottazzi et al., 2016). Furthermore, Investor's
trust in the P2P lending application will affect the willingness to invest (Chen et al., 2014).
Based on these conditions, the proposed hypothesis is:
H10: Perceived risk has a negative and significant effect on investment intention.
H11: Trust has a positive and significant effect on investment intention.
Following the abovementioned reviews and hypotheses, the present study proposes
a conceptual framework presented in Figure 1.

Figure 1. Conceptual Framework

3. METHOD, DATA, AND ANALYSIS

This research activity was from September to December 2020. This research is a
quantitative study with a survey method conducted in a cross-sectional survey. The
sampling technique in this study is non-probability sampling with voluntary participation
within certain limits. The sample involved millennials born between 1982 and 2000 and had

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never made the investment via P2P lending. Based on Hair et al. (2009) that each latent
variable requires five to ten observations. Therefore, the research has 39 indicators where
the sample number is between 195 and 390 respondents. A total of 254 respondents have
met the criteria and completed the online questionnaire managed via Google Docs.
The instrument used in this research was modifying the tools used in several studies
with employed a Likert scale involving five options. These instruments include questions
about financial literacy (Lusardi & Mitchell, 2014), relative advantage (Kim et al., 2009),
perceived reputation (Sipangkar & Wijaya, 2020), perceived structural assurance (Bock et
al., 2012), perceived information quality (Kim et al., 2008), perceived risk (Featherman &
Pavlou, 2003), trust (McKnight & Chervany, 2001), and investment intention (Pavlou, 2003).
This study uses primary data from online questionnaires distributed through social media.
Furthermore, the model based on hypothesis was analyzed by the Structural Equation
Model (SEM) using LISREL software.
4. RESULTS
The respondents in this research were female (51.2%), while the rest was male
(48.8%). Most respondents were aged between 26 and 31 years old (67.7%), and most were
single (59.1%). The majority of the respondents were private workers (54.7%), and many
had monthly salaries ranging from Rp 5.000.000 to Rp 10.000.000 (44.9%). Also has
ownership of other types of investment (91.6%). Respondents with a bachelor's degree are
dominated by 196 subjects (77.2 %). More than half of the respondents are from the West
Java province (58.3%), while the rest were from various regions in Indonesia (41.7%).
The Overall Model Fit Test
This study was conducted based on several Goodness-of-Fit criteria. The results
obtained after respecification indicate that it can accept the overall fittest of the model with
good description (Table 1).
Table 1. The overall model fit test results
Goodness-of-Fit Criteria Cut-off Final Results Description
Value
1. Standardized Root Mean Square Residual ≤ 0.08 0.07 Good fit
(SRMR)
2. Root Mean Error Approximation (RMSEA) ≤ 0.08 0.08 Good fit
3. Good Fit Index (GFI) ≥ 0.9 0.76 Marginal fit
4. Adjusted Good Fit Index (AGFI) ≥ 0.9 0.72 Marginal fit
5. Normed Fit Index (NFI) ≥ 0.9 0.91 Good fit
6. Comparative Fit Index (CFI) ≥ 0.9 0.93 Good fit
7. Relative Fit Index (RFI) ≥ 0.9 0.90 Good fit

Validity and Reliability Test

The measurement model's suitability criteria are reviewed based on the validity and
construct reliability of indicators against latent variables. An indicator is valid if it has a
standardized loading factor (SLF) value that it can tolerate, i.e.,≥ 0.5, with a t-value >1.96.
Several latent variable constituent indicators have not met the validity requirements and
consider withdrawn, namely FL3, FL7, FL8, RA1, RE5, PR5, and TR1. Meanwhile, FL1 is

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doesn't remove because it is an indicator that represents financial knowledge. Furthermore,

the measurement indicators have valid and reflected the latent constructs in the model
(Table 2).
Table 2. Validity and reliability test results after elimination
Variance Construct Standardize
Variable Indicator Extracted Reliability Loading Factor t-value
(CR) (SLF)
(VE)
Financial Literacy FL1 0.34 0.70 0.16 2.23
FL2 0.53 8.06
FL4 0.62 9.68
FL5 0.58 8.92
FL6 0.83 13.37
Relative Advantage RA2 0.57 0.84 0.71 12.30
RA3 0.74 13.08
RA4 0.78 13.32
RA5 0.82 15.26
Perceived RE1 0.57 0.84 0.71 12.39
Reputation
RE2 0.81 14.96
RE3 0.82 15.35
RE4 0.66 11.24
Perceived SA1 0.64 0.88 0.78 14.14
Structural
SA2 0.82 15.22
Assurance
SA3 0.82 15.32
SA4 0.78 14.06
Perceived IQ1 0.62 0.89 0.70 12.45
Information Quality
IQ2 0.80 14.84
IQ3 0.79 14.78
IQ4 0.81 15.26
IQ5 0.84 15.97
Perceived Risk PR1 0.57 0.84 0.61 -
PR2 0.70 9.17
PR3 0.82 10.21
PR4 0.86 10.53
Trust TR2 0.51 0.75 0.62 -
TR3 0.78 8.43
TR4 0.71 8.28

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Variance Construct Standardize

Variable Indicator Extracted Reliability Loading Factor t-value
(CR) (SLF)
(VE)
Investment IN1 0.82 0.93 0.90 -
Intention
IN2 0.93 23.45
IN3 0.88 20.75

The reliability evaluation is reviewed based on Variance Extracted (VE) and

Construct Reliability (CR). The results showed that all variables met the reliable
requirements with a value of CR ≥ 0.7 and VE ≥ 0.5 except financial literacy (Table 2). These
results indicate that each indicator variable after elimination has a reliable conclusion to
measure its latent construct. In contrast, the financial literacy variable shows that the
Variance extracted value is less than 0.5 but still has to construct reliability with a value of
0.7. Therefore, the convergent validity of the latent construct is still considered adequate.
Hypotheses Testing Results
The influence of variables is significant if only the path coefficient ≥ 0.05 and t-value
> 1.96 (Table 3).
Table 3. Hypotheses testing results
Path
Inter Variables Effect |t-value| Conclusion
Coefficient
H1 Financial Literacy ⟶ Perceived Risk 0.09 1.54 Not significant
H2 Relative Advantage ⟶ Trust 0.34 2.13* Significant
H3 Perceived Reputation ⟶ Perceived Risk -0.34 3.71* Significant
H4 Perceived Reputation ⟶ Trust 0.41 2.26* Significant
H5 Perceived Structural ⟶ Perceived Risk 0.23 2.90* Significant
Assurance
H6 Perceived Structural ⟶ Trust 0.05 0.41 Not significant
Assurance
H7 Perceived Information ⟶ Perceived Risk 0.18 1.83 Not significant
Quality
H8 Perceived Information ⟶ Trust 0.35 2.45* Significant
Quality
H9 Trust ⟶ Perceived Risk 0.22 3.38* Significant
H10 Perceived Risk ⟶ Investment 0.77 9.34* Significant
Intention
H11 Trust ⟶ Investment 0.20 3.58* Significant
Intention

The following table explains the relationship between financial literacy and perceived
risk in P2P lending (H1) is not significant. This condition is caused by the t-value less than

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1.96 even though the path coefficient value reaches 0.09, so this result does not support the
hypothesis. The relationship between relative advantage and trust in P2P lending (H2) is
significant and has a direct positive effect (t = 2.13; path = 0.34). It implies that the result
supports the hypothesis as expected. Simultaneously, perceived reputation significantly
influences perceived risk (H3) and trust (H4) in P2P lending. As expected, perceived
reputation has a direct negative impact on perceived risk (t = 3.71; path = -0.34) and a direct
positive impact on trust (t = 2.26; path = 0.41), so both of hypothesis is supported.
Perceived structural assurance has a significant direct positive effect on the perceived
risk in P2P lending (H5). However, this relationship was not in the expected direction (t =
2.90; path = 0.23). In contrast, the relationship between perceived structural assurance and
trust in P2P lending (H6) is insignificant. The result shows that the t-value is less than 1.96,
although the path coefficient value is equal to 0.05. Next, the relationship between
perceived information quality and perceived risk in P2P lending (H7) shows insignificant
results. This condition is caused by the t-value less than 1.96 even though the path
coefficient value is greater than 0.05. Otherwise, perceived information quality has a
significant and positive effect on trust in P2P lending (H8). The result proves the expected
direction (t = 2.45; path = 0.35) so that the hypothesis is supported.
Trust has a significant direct positive effect on the perceived risk in P2P lending (H9).
It implies that the relationship was not in the expected direction (t = 3.38; path = 0.22). The
same thing is also experienced in the relationship between perceived risk and investment
intention in P2P lending (H10). Although this relationship has a significant effect, it is not
in the expected direction (t = 9.34; path = 0.77). Finally, trust has a positive and significant
effect on investment intention in P2P lending (H11). The result shows that the t-value is 3.58,
and the path coefficient value is 0.20. In addition, the result indicates that perceived risk
has a strong effect on investment intention than trust.
5. DISCUSSION
Individual factors related to Indonesian millennial financial literacy have no
significant effect on the perceived risk of investing in P2P lending applications. It gives
different results from previous research, which found that financial literacy affects
investors' perceived risk (Aren & Zengin, 2016; Waheed et al., 2020). Based on the results
of our research, millennials tend to have adequate financial knowledge and know the
differences in investment risks and the risk-return relationship. In addition, they tend to
think about long-term financial goals too. However, each individual has different
preferences regarding risk, so the acceptable level of risk is not the same. It is indicated
because the respondents in this study are investors with varying risk preferences, including
conservative, moderate, and aggressive. Furthermore, van Rooij et al. (2011) revealed that
there is a tendency that if the level of financial literacy increases, it will reduce the
possibility to invest because they are aware of the risks. Therefore, financial literacy is not
proven as a determinant of individual intention to invest because of differences in risk
tolerance (Gusni et al., 2020).
The results of our study show that one of the characteristics of innovation, namely
relative advantage, is proven to have a significant and positive effect on trust in P2P
lending. This condition indicates that the greater the relative advantage provided by the
organizers can increase millennial confidence in using the application. We found that one
of the essential roles of relative advantage when investing in P2P lending is to have social
value to provide alternative loan capital for borrowers with limited access to finance.

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Millennials tend to trust to invest using P2P lending applications when the organizers can
generate different added values to achieve financial productivity. Furthermore, this study's
results are the same as preceding research, where relative advantage can positively and
significantly impact individuals' trust in the use of financial services (Chen & Wang, 2016;
Kim et al., 2009; Syarifah et al., 2020).
P2P lending is well known as an investment alternative by millennials in this study.
The analysis results prove that the millennial has assessed the P2P lending application as
having a good reputation as an alternative investment that is increasingly trusted to be
used and reduce their perceived risk when investing in this application. We found that the
contribution of the application's popularity has an essential role in increasing trust and
reducing perceived risk. Therefore, reputation can also be considered a basis for reference
or ranking contained in a community (Wei et al., 2017). The millennials who have never
invested in P2P lending tend to have behaviors that depend on the application's reputation.
This study result is similar to preceding research conducted by Li et al. (2016), Shao &
Zhang (2018), and Sipangkar & Wijaya (2020).
Next, the perceived structural assurance in this study can influence the perceived risk
positively. We indicate that the millennial believes in a structured technology guarantee
such as legal, privacy, and security that can protect online transactions but has not reduced
the risk strongly. The analysis results are identical with Li et al. (2016) and Wang et al.
(2014). Interestingly, perceived structural assurance cannot affect trust in P2P lending. It
gives different results from previous research by Chen et al. (2014), Wang et al. (2014), and
Yang & Lee (2016). Still, these results are the same as research by Kang et al. (2016), which
found no relationship between structural assurance and trust in investment via
crowdfunding. Based on our study, a possible explanation is that the millennials know a
guarantee of legal protection and structured technology on the P2P lending application to
minimize risks, but this is not entirely reliable. There was still security and privacy aspects
contribution in transactions, which was deemed insufficient to protect users.
There is a finding that perceived information quality could only affect trust. This
result explains that the better the millennial's perceived information quality provided by
the organizers, the more it will affect their confidence in using the application for investing.
Our finding is similar to research by Chen et al. (2015) and Puteri et al. (2019). Contrary to
our theoretical expectations, the results show that the relationship between perceived
information quality and perceived risk is insignificant. It is suspected that millennial tends
to trust P2P lending applications to provide information following their function, but this
does not reduce the perceived risk. Millennials in this study have no experience using P2P
lending applications as investment instruments, so they believe that the information
provided can give them the confidence to invest in P2P lending. However, they tend to face
the risks inherent in the information because risks cannot be avoided even though the
information provided has been appropriately verified to minimize existing risks.
Furthermore, trust is effective in influencing investment intentions using the P2P
lending application for millennials. Our finding is the same as the previous research (Al-
Jabri, 2015; Malaquias & Hwang, 2016; Yosita & Giri, 2016). P2P lending can provide
investment opportunities is one of the strongest indicators in describing millennial
confidence in the application's abilities. In this case, millennials already believe P2P lending
can provide investment returns that match expectations like other investments. Meanwhile,
the risk of using a P2P lending application, especially privacy risk, is still very much
considered. In this case, investing using a P2P lending application tends to lead to a loss of

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privacy control which is a strong indicator in describing the risk of investing in that
application. There are still issues regarding the misuse of private data, especially in
Indonesia's P2P lending application, which causes this aspect to feel stronger by millennials
than financial loss.
Even though the perceived risk is relatively high, millennials may not be
instantaneous, decide not to participate in P2P lending. According to Ademola et al. (2019),
if investors are increasingly willing to take risks, investors will have the ability to make
investment decisions. Millennials would also consider the trust that they have towards the
platform and make their investment decision. Eventually, the intention to use P2P lending
applications to invest in the future is a dominant indicator based on investment intentions.
In addition, there is a willingness to seek more information about P2P lending.
6. CONCLUSION, LIMITATION, AND SUGGESTION
Conclusion
The results show the consumer decision-making model in the investment intention
process by combining trust and perceived risk antecedents. Based on individual
understanding of finance, the characteristics of product innovation, and the unique features
of P2P lending provide a new perspective on the understanding that considers achieving
investment goals. Our findings show that millennial perceived risk is an essential
determinant of investment intention in P2P lending applications. Interestingly, the effect of
perceived risk is in line with the millennial intention to invest. This condition illustrates a
significant investment risk that does not discourage millennials from investing using P2P
lending applications because there is still an influence of millennial trust in these
instruments.
From another perspective, an individual's understanding of finance does not affect
the perceived risk for investing. On the other hand, the innovation characteristics related
to relative advantages can affect millennial confidence in using different investment
instruments. Comprehensively, not all unique features related to P2P lending applications
can involve perceived risk and trust. Millennials consider that the perception of P2P
lending reputation plays an essential role in influencing their trust and perceived risk to
invest. Meanwhile, perceived structural assurance can only affect millennial perceived risk
related to transaction protection and privacy. In addition, perceived information quality
can affect millennial confidence in investing in P2P lending, neglecting the millennial's
perceived risk.
The organizer can consider improving several aspects to increase new investors,
especially millennials, based on research results. First, improve the reputation by providing
reliable and responsive services so that investors can spread service satisfaction with P2P
lending applications to potential investors. Second, the level of security technology and
privacy protection in transactions still needs to be improved to reduce privacy infringement
issues. Organizers can cooperate with certain authorities to innovate in the latest
technology for transaction and privacy protection. Lastly, optimize more varied
information about P2P lending by adding periodic reports on the use of loans
transparently. Thus potential investors will increasingly believe that the funds to be
invested for the right things.

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Limitation and suggestions

This study only examines P2P lending applications in general loan investments,
while loan investments are divided into two categories: productive and consumptive.
Further research must focus on P2P lending applications with the same loan categories and
policy to compare potential investors' investment intentions between organizers. Next, we
can consider other variables that might affect the perceived risk and trust in P2P lending
applications, such as perceived third-party certification, electronic word of mouth, and
application complexity. It is hoped that the addition of these variables can provide a
broader view of increasing investment intentions in P2P lending.
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