Platform Reputation Effects in Lenders' Decisions to Invest in Peer-to-Peer Lending in Indonesia (original) (raw)
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Latest data from Asosiasi Fintech Indonesia, financial technology in Indonesia has been growing from 9% in years 2013-2014 to be 78% in years 2015-2016. With the trustful new system, P2P lending scheme has potential to continue growing and support Indonesian economy. Since peer to peer (P2P) lending service has been growing rapidly these days, this paper aims to understand which factors could support the growth of P2P lending service in Indonesia. Several factors that support P2P lending are better macroeconomics condition, demographic changes, consumer behavior, growth of financing, and support from regulation. P2P lending itself is categorized in 3 groups, which are: personal borrowing, small business borrowing, and borrowing for students. Using Global Findex Database 2014, we conduct logit and margins regression across ASEAN countries, controlling the country. Combining the analysis with literature review, we found two main results. Male, younger people, and the poorest 20% of income group tend to have higher probability to borrow money. Probability of people in the poorest 20% group to borrow money is approximately 0.53, while probability of the richest 20% to borrow money is only 0.47. Among ASEAN countries, people in Indonesia, along with Cambodia and Philippines, have higher probability to borrow money; which is around 0.60, 0.61, and 0.75, respectively. In particular, Indonesia has two main factors which will contribute to the potential of its growth: demographic composition dominated by younger age; and the presence of potential regulation which has already been applied in its financial environment. Combining those analysis, we conclude that P2P lending service is potential to continue growing in Indonesia.
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Russian Journal of Agricultural and Socio-Economic Sciences, 2020
Peer-to-Peer Lending (P2P) applications were developed as an alternative funding solution, mainly for small-medium enterprises. P2P can also be a promising alternative investment instrument. The significant gap between the number of lenders and borrowers is as a major issue that has been identified in the P2P of Indonesia. Therefore, the analysis of factors affecting willingness to lend in P2P lending needs to be done. The purpose of this study is to identify the socioeconomic characteristics of lenders, lenders perspective on familiarity, service quality, security protection, borrowers' reputation, borrowers' information, perceived benefits, perceived risk, trust to the borrower, trust to the intermediary, and willingness to lend in P2P lending applications. A total of 109 respondents filled out online questionnaires distributed through several media with the criteria of Indonesian citizens with investment experience in P2P. Descriptive and crosstab analysis was applied in this study. Based on the result, the impression that the borrowers will keep their promises (TB3), the system/ policy applied in the P2P platform to protect the interest of lenders (TI 2), the sense of security upon making transactions in P2P (SP 1), more attractive investment returns (PB 3) and quality assurance of prospective borrowers (SQ 4) are the most important factors affecting lenders willingness to lend.
P2p Lending: Complement or Substitute to Small Bank
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Rapid P2P lending growth in Indonesia is expected to bring new opportunities as well as risk to the traditional financial sector. Meanwhile, covid-19 pandemic have also brought many changes to the financial landscapes. In this current pandemic situations, not many studies have been conducted about the impact of P2P especially on small bank loans, which is the type of bank that will be the first to feel the disruption in performance, if any, as well as comparing the impact between pre pandemic and during the pandemic period. Thus, this paper aims to analyze and compare the effect of P2P lending growth on the growth of small bank loans, which consists of 56 banks as of June 2021, both before (January 2019-March 2020) and during the pandemic (April 2020-June 2021). We believe focusing the research on small banks is important because these are the incumbent players in the financial sector that are expected to be the most impacted by the arrival of the P2P lending business and the pandemic situation. This research used the quantitative approach. The analysis was carried out in stages using monthly secondary panel data obtained from OJK and BPS with multiple regression analysis. The variables we used are small bank loan growth as the dependent variable, and P2P loan growth, inflation, and money supply as the dependent variables. First we analyzed the data before the pandemic, then we analyzed after the pandemic data and compared both results. Results of this study showed that P2P lending did not have a significant impact on small bank's ability to disburse loans before the pandemic. However, our subsequent analysis regarding data during the pandemic showed that P2P lending has a significant positive impact on small bank loans growth, and gave evidence of P2P complementary effect to small banks. Both results suggest that initially before the pandemic P2P main customer is the unbanked population that cannot have access to banks, then when the pandemic occurs, borrowers that have access to small banks also consider to use P2P as their additional financing source.