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Can Borrowing Bring Us Together?


At TDL, our role is to translate science. This article is part of a series on cutting edge research that has the potential to create positive social impact. While the research is inherently specific, we believe that the insights gleaned from each piece in this series are relevant to behavioral science practitioners in many different fields. As a socially conscious applied research firm, we are always looking for ways to translate science into impact. If you would like to chat with us about a potential collaboration, feel free to contact us.


Lending among friends is a quotidian activity that many of us do from day to day without thinking. However, borrowing has consequences beyond the financial realm alone. Our relationships are affected by these financial ties, often in ways that we might not expect.

Dr. Laura Straeter and Jessica Exton, two behavioral scientists at ING, a Dutch bank have taken a closer look at this perplexing everyday occurence. Their research studies the interlocking factors that influence friendship and finance, which touches on several key areas of interest for The Decision Lab.

We reached out to Laura and Jessica to discuss their work on this study as well as the future direction of research involving applied behavioral science and finance.

To read more about the study, check out the Behavioural Economics Guide (page 96).

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Nathan: How‌ ‌would‌ ‌you‌ ‌describe‌ ‌the‌ ‌focus‌ ‌of‌ ‌your‌ ‌research‌ ‌to a general audience? ‌

Laura: Have you ever found yourself in a social situation where you are out and about but have forgotten your wallet? You wouldn’t have wanted to forego the movie, dinner, or other activity you were about to enjoy, so you may have asked to borrow some money from a friend.

Jessica: This type of informal lending market among friends can be used to cover small expenses when both the lender and the borrower are happy to be a part of the transaction. But attitudes towards sharing money between friends are quite complex.

Laura: Social norms of mutual care govern friendships, which is demonstrated when we help others in need. But because friendships do not naturally revolve around money, we have specific expectations of lending between close friends that differ from other types of lending arrangements. There is an element of risk associated with introducing money into a friendship because it can shift the focus and change one’s role within the relationship.

Nathan: How‌ ‌do these ideas narrow into a specific project?‌ 

Jessica: Lending between close friends may be an effective way to cover small expenses. But borrowing among friends, even small amounts, comes with risk. Associating a financial value with friendship can be confusing as it challenges our social ties and the foundations on which many friendships are formed. Indeed, when the norms of friendships are not met, such as when we start to focus too heavily on financial exchanges, social ties can be damaged.

Laura: We wanted to understand how roles within a lending arrangement, i.e. being either the lender or the borrower, and how often people request to borrow money, affects friends’ willingness to be part of informal lending arrangements.

Nathan: What‌ ‌was your hypothesis? ‌

Dr. Straeter: We expected to find that friends do not make optimal use of informal loans. Specifically, friends would be more willing to lend money than they were willing to make a request to borrow, resulting in excess capacity within the lending market.

Laura: Borrowers may feel uncomfortable imposing a burdensome request for financial assistance on their friends. But when given the opportunity to provide support, lenders may be very willing to provide these small types of financial support. Our personal finances are more mobile than ever, so loans and repayments can hypothetically be made with a simple click, making repayment easier and easier.

Jessica: With these different perspectives, those without funds would feel reluctant to ask for financial support, despite lenders being more than happy to cover the costs. Friendships could therefore be considered an untapped source of short-term financial support.

Jessica: We expected that the gap in willingness to enter into a lending arrangement with a friend would be influenced by the number of times a friend asked to borrow money. On the one hand, it could be presumed that repetition would decrease the gap if borrowers became more willing to borrow given a positive experience of borrowing before, or lenders decreased their willingness to lend if request repetition became a burden. If repeated requests were made, this may have caused a friendship to become monetized and at risk of losing its social aspect.  

Laura: Yet on the other hand repetitions may have increased the gap between willingness to borrow and to lend even further. This could happen if borrowers perceived repeated requests as an excessive burden on their friendship, but lenders continued to receive an altruistic payoff from continually helping out their friend.

Nathan: What‌ ‌did‌ ‌you‌ ‌end‌ ‌up‌ ‌finding‌ ‌out?‌ 

Laura: Consistent with our expectations, we found that people are generally hesitant to ask friends for financial support, whereas friends are relatively happy to provide small, short-term loans to others. This gap in willingness to borrow from and willingness to lend to a close friend suggests that we do not optimally exploit the informal lending market. 

Jessica: We also found that this gap in attitude between lenders and borrowers widened for repeated requests. For repeated requests, lenders became even more likely to lend to a friend and borrowers became even less willing to borrow. Basically, the more times the borrower asked for money from their friend, the more hesitant they were to ask again, yet the more willing the lender was to cover the costs.

Nathan: How‌ ‌do‌ ‌you‌ ‌think‌ ‌the‌ ‌results‌ ‌of‌ ‌this‌ ‌study‌ ‌would‌ ‌differ‌ ‌among‌ ‌groups‌ ‌who‌ ‌have‌ ‌less‌ ‌access‌ ‌to‌ ‌traditional‌ ‌credit?‌ 

Jessica: We set our study within the context of a request to lend and borrow between close friends in a hypothetical shopping situation, where one person suddenly realized that they had forgotten their wallet at home. They had the money available, however, didn’t have immediate access to it.

Jessica: This doesn’t directly translate to all situations of monetary shortage. For example, given that we specified within the condition that in previous borrowing cases, the borrower had made repayments in a timely manner and in full, this suggested that they could be relied upon to also meet these repayments.

Laura: Our research generally highlights how difficult it is for people to ask friends for help, even though friends are happy to help in some way. Although our research covers smaller amounts, it is possible that repeated loans could be considered as bigger total amounts. Not a perfect translation to a serious financial shortage a friend may be experiencing, but this could be something to investigate through future research. We do expect that levels of indebtedness (i.e. having not paid back previous requests) will affect willingness to borrow and willingness to lend. However, this is something to study further. ‌

Nathan: Do‌ ‌you‌ ‌think‌ ‌‘successful’‌ ‌loans‌ ‌—‌ ‌ones‌ ‌where‌ ‌the‌ ‌lender‌ ‌is‌ ‌repaid‌ ‌back‌ ‌in‌ ‌a‌ ‌timely‌ ‌manner‌ ‌—‌ ‌can‌ ‌strengthen‌ ‌the‌ ‌friendship‌ ‌between‌ ‌the‌ ‌borrower‌ ‌and‌ ‌the‌ ‌lender?‌ ‌What‌ ‌are ‌the‌ ‌implication‌s ‌of‌ ‌this?‌ 

Laura: If the arrangement works for both parties, which our research suggests is possible, there is potential for this to be a mutually beneficial arrangement and support a developing friendship. It may be that the experience of providing and receiving support brings people closer together, or that the respect demonstrated through a quick repayment of the loaned amount enhances the friendship. This may very well depend on the people involved in the transaction and the communication and management of expectations. While we didn’t specifically research this, it appears logical.

Laura: It’s worth remembering, however, that financial transactions between friends come with some risk – if not repaid in a timely matter under mutually agreed conditions, such an arrangement could easily damage the relationship. For example, if the lender continually has to ask the borrower for the amount they are owed, the relationship can start to focus on the monetary transaction rather than the social ties on which it was founded.

Nathan: What‌ ‌are‌ ‌some‌ ‌ways‌ ‌that‌ ‌the‌ ‌findings‌ ‌of‌ ‌this‌ ‌study‌ ‌could‌ ‌be‌ ‌applied‌ ‌to‌ ‌products‌ ‌or‌ ‌services,‌ ‌and‌ ‌how‌ ‌could‌ ‌this‌ ‌improve‌ ‌society?‌

Jessica: Our study confirmed that people are more willing to lend than to borrow from a close friend. This gap suggests there may be scope within friendships for providing increased levels of monetary support. In addition, we find that this gap widens when requests are repeated.

Jessica: These findings highlight an opportunity for friends to be lending and borrowing between each other more. Given this, technological tools that simplify transactions and enable payments between friends may smooth the perception of the lending process and reduce the friction we see between willingness to borrow and willingness to lend. The impact of new technologies within personal finance remains an area for investigation and may be of interest to both the private and public sectors.

Nathan: What‌ ‌do‌ ‌you‌ ‌think‌ ‌are‌ ‌some‌ ‌exciting‌ ‌directions‌ ‌for‌ ‌further‌ ‌research‌ ‌stemming‌ ‌from‌ ‌your‌ ‌study?‌‌

Laura: Future research could focus on boundary conditions to these results, further investigating when the gap between willingness to lend and willingness to borrow does not occur. For example, a lender’s ability or willingness to part with funds, even temporarily, is likely to be directly related to their financial fitness. In addition, willingness to lend is also expected to rely heavily on the past repayment activity of the borrower, as well as the ease at which transactions can be processed. In addition, whether the loan is for a specific expense or for general use is also something that may influence willingness to borrow and lend between friends.

About the Authors

Laura Straeter

Laura Straeter


Laura Straeter is a behavioural scientist at ING. She joined ING in 2018 and has expertise in psychology and consumer behaviour. Laura holds a PhD in consumer research and marketing from the Rotterdam School of Management, Erasmus University and has a background both in marketing and economic psychology. Laura has previously lectured at Maastricht University School of Business and Economics at the graduate and undergraduate level.

Jessica Exton

Jessica Exton

University of Amsterdam

Jessica Exton is a behavioural scientist with cross-sector management consulting experience. She joined ING’s International Consumer Economics team in 2018 and holds a master's degree in behavioural economics from the University of Amsterdam. Jess manages the ING International Survey, one of Europe’s largest and longest-running surveys on financial decision making and delivers insights from behavioural science to ING's retail business.

Nathan Collett portrait

Nathan Collett

Senior Editor

Nathan Collett studies decision-making and philosophy at McGill University. Experiences that inform his interdisciplinary mindset include a fellowship in the Research Group on Constitutional Studies, research at the Montreal Neurological Institute, a Harvard University architecture program, a fascination with modern physics, and several years as a technical director, program coordinator, and counselor at a youth-run summer camp on Gabriola Island. An upcoming academic project will focus on the political and philosophical consequences of emerging findings in behavioral science. He grew up in British Columbia, spending roughly equal time reading and exploring the outdoors, which ensured a lasting appreciation for nature. He prioritizes creativity, inclusion, sustainability, and integrity in all of his work.

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