Abstract
Peer-to-peer (P2P) lending has the potential to boost financial inclusion in emerging markets. This paper contributes to the literature on fintech governance in emerging Asian markets. It examines the case of the Indonesian government’s approach in regulating the P2P lending sector using both primary interviews and secondary firm-level data. Driven by regulation tightening in China and regulatory gaps in Indonesia, Chinese investments became the largest in this sector contributing, however, to growing risks from illegal business practices. The Indonesian government responded by creating new regulations and institutions, mitigating risks without stifling the potential for financial inclusion. We conclude a proactive approach towards monitoring and regulating emerging high-tech industries should be sought by strengthening links with industry and civil society, and through international cooperation for policy and knowledge sharing.
Highlights
Peer-to-peer lending is a relatively new form of online lending that matches potential borrowers with investors using digital and communications technologies
This paper examines Indonesia’s innovative and prompt regulatory and institutional responses to the expansion of online P2P lending backed by foreign investments predominantly from China using both primary interviews and secondary firm-level data
This paper has shown how, in the cases of Indonesia’s online P2P lending, regulators tended towards a reactive approach, which established a novel system of regulations and institutional collaboration to tackle the adverse negative effects of these activities
Summary
Peer-to-peer lending ( known as P2P lending, or platform lending) is a relatively new form of online lending that matches potential borrowers with investors using digital and communications technologies. This paper examines Indonesia’s innovative and prompt regulatory and institutional responses to the expansion of online P2P lending backed by foreign investments predominantly from China using both primary interviews and secondary firm-level data. It starts by analyzing the P2P lending expansion in China, the resultant risks, and recent regulation efforts. Our analysis employs data from primary interviews, as well as secondary firm-level data of OJK-registered online lending platforms, with aggregated information on investor relations and loan product types from numerous sources. We divided the product types by the primary target markets, namely MSME or corporations, consumer or individuals, Sharia loans, education funds, health funds, agriculture funds, maritime funds, real estate funds, e-commerce financing, and women-
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
