Success Factors Influencing Peer-to-Peer Lending to Support Financial Innovation

Abstract

The purpose of this study is to identify success factors that are conducive to developing the ability to create financial innovation within developing countries for the sake of sustainability. The purpose of this research is to contribute to the identification of success factors. The case study involves a peer-to-peer lending (P2P Lending) business operator in Thailand and focuses on the lender perspective. The results consist of 13 potential factors driving financial innovation in process improvement. The study collected data from 300 respondents through a structured questionnaire. The structural equation model was used to analyze the data via Mplus version 7. In order to gain a better understanding, we emphasize that each country’s financial business may show different success factors due to different situations and environments, which might pose a challenge when drawing conclusions from the survey and building sustainability in the financial industry. The research summarizes the factors of success in 3 contexts with 13 factors; namely, the risk context consists of a higher interest rate, inflation increase, macroeconomics, regulation laws, and legal, liquidity, and finance and credit status. The trust context includes demographic characteristics, biological characteristics, and an individual’s reputational capital, and the lender perspective information context includes loan delinquencies, funded loans, politics, and culture. According to our results, the investor or lender will benefit from bringing concepts and methods that involve adopting international loans.