How a relationship suffers when a friend borrows money from another

http://www.washingtonpost.com/business/friends-loans-and-consequences/2012/07/20/gJQAxNwo0W_story.html

Their study — “Lenders’ blind trust and borrowers’ blind spots: A descriptive investigation of personal loans” — appears in the Journal of Economic Psychology and was just published online.

The researchers examined two psychological issues. They wanted to know whether the two people in the financial transaction — the lender and borrower — are subject to self-serving bias when it comes to recalling different aspects of the loan. And they looked at when and how loans affect the relationship and subsequent interactions between borrower and lender.

They surveyed 971 individuals about their experiences with personal loans. Participants completed a survey on personal loans they had made and received within the past five years. They answered questions about the characteristics of the loans — size, purpose, amount repaid, presence of interest and existence of a formal contract.