Peer Lending Research Articles

ANALISIS PEER TO PEER LENDING DI INDONESIA

Problems arising from the development of fintech include data security and legal certainty of online-based loans so that it impacts on potential risks to consumers and financial stability and integrity. The purpose of this study is to analyze the development of peer to peer lending in Indonesia, which is reviewed based on relevant institutional regulations and literature studies. This research uses a descriptive method with literature review. The results of this study describe the types of fintech that fall into the dominant category in Indonesia are peer to peer lending, peer to peer lending users by productive age with a percentage of 70%. In October 2019 the number of loans increased 200.01%. The government supervises peer to peer lending through three institutions there are Bank Indonesia, the Ministry of Communication and Information and OJK. The three institutions oversee operations from the start up to consumer protection. Peer to peer lending targets MSMEs that are feasible but cannot obtain bank credit facilities. Peer to peer lending can help develop MSMEs in financial terms, especially in the field of financing.

Peer-To-Peer Lending and Equity-Based Crowd Funding - Status Quo and the Leap Forward

This paper intends to evaluate the modern-day concepts of public fund raising under the aegis of ‘peer-to-peer lending’ and ‘equity-based crowdfunding’ and to highlight their importance in the current world market scenario. It traces the evolution of crowd funding and highlights its practical functioning with noteworthy illustrations and statistical analysis. This paper intends to address the dire need for regulation of these activities, by bringing to light the deficiencies and lacunae in the extant laws and suggested solutions thereto. In furtherance of the said objective, a double faceted approach is taken. First, the paper examines the parallel international practices of such regulations in the United States of America, United Kingdom, China, France, New Zealand, Korea etc. and then it evaluates extant Indian laws. The paper has also dissected the attempts made by regulatory bodies in India, such as the Reserve Bank of India’s Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 and the Securities and exchange Board of India’s Consultation Paper on Crowdfunding in India, 2014 which aim to regulate these activities. The paper recognizes the dire need for a meticulous regulation of equity-based crowdfunding and for this purpose concludes with suggestions. The paper highlights the need for introduction of interest cap on peer-to-peer lending, introduction of a ‘cooling-off’ period for investments by retail investors in Equity crowdfunding, additions to investor education and risk undertaking by investors, strengthening suggested valuation standards etc.

FAKTOR-FAKTOR YANG MEMENGARUHI INDIVIDU DALAM MENGGUNAKAN PEER TO PEER LENDING DAN EQUITY CROWD FUNDING DI DKI JAKARTA

Financial Technology (Fintech) is rife in finance. Fintech giving advantages to users such as efficiency, and also capable to increase financial inclusion in Indonesia. Peer to Peer Lending service, and Equity Crowdfunding are currently becomeing a trend. The research purpose is to find out what factors influencing individuals in using these digital financial services. This research was conducted in DKI Jakarta by collecting 349 respondents consisting of various demographic characteristics and using the Purposive Random Sampling sampling method. The variables used in research are adaptations of the UTAUT (The Unified Theory of Acceptance and Use of Technology) theory. The results obtained in the form of Performance Expectant Variables and Effort Expectancy have a positive and significant effect on Behavioral Intention of Peer to Peer Lending Services, while Social Influence, Trust, Reputation, and Self Efficacy variables have no positive and significant influence on Behavioral Intention of Services Peer to Peer Lending. Then for Equity Crowdfunding Services the results obtained in the form of Performance Expectancy Variables have a positive and significant effect, while the other 5 variables namely Effort Expectancy, Social Influence, Trust, Reputation, and Self Efficacy do not have a positive and significant effect on Behavioral IntentionKey Words : Fintech, UTAUT, Peer to Peer Lending, Equity Crowdfunding, Performance Expectancy, Effort Expectancy, Social Influence, Trust, Reputation, Self Efficacy, Behavioral Intention.

INDONESIAN PEER TO PEER LENDING (P2P) AT ENTRANT’S DISRUPTIVE TRAJECTORY

Peer to peer (P2P) lending in Indonesia has been growing rapidly, therefore there is the potential for disruptive innovation processes in the financial sector. The aim of this study is to examine the impact of the growth of P2P lending on the growth of bank lending for micro, small and medium enterprises (MSME) and Non-MSME debtors. Separating the scale of the debtor is important, given the initial process of disruptive innovation of reaching areas that are not the incumbent’s main target. The examination was conducted in this study using panel data regression, whereby the examination was done in stages. This was an overall examination without differentiating between the regions, further examination conducted with more detail by separating between the loans inside and outside Java Island. This is because the economic structure in Indonesia is still dominated by the regions in Java, but FinTech is generally able to grow in areas with less developed local economies. The result of this study is consistent overall, Java and outside Java Island, as shows that the growth in P2P lending in Indonesia does not have a significant impact on the growth of bank loans for Non-MSME lending. However, it does have a negative impact on the growth of bank loans for MSME lending. This is in line with the entrant’s disruptive trajectory process by which the entrants enter the competition through an underserved market (niche markets) and not through the main target market of the incumbent (MSME).

The Role of Peer to Peer Lending in Increasing Funding for Micro, Small, and Medium Enterprises

This study aims to describe the potential of MSMEs in Indonesia and the role of technology in the industrial era 4.0, especially in alternative funding in the form of Peer to Peer (P2P) Lending in providing funding solutions for MSMEs. This study uses a literature review including academic studies on MSME financing in Indonesia by using the results of previous studies and surveys on Indonesian MSME. The development of P2P Lending is the solution for MSMEs with no access to financial aid from banks.

WHY ARE YOUTH INTENT ON INVESTING THROUGH PEER TO PEER LENDING? EVIDENCE FROM INDONESIA

This study aims to analyse the factors that influence the intention of youths/millennials in Jakarta, the capital of Indonesia, to invest in Peer to Peer (P2P) lending. Due to the relative newness of P2P lending in Indonesia, the framework utilised is the Technology Acceptance Model (TAM), and the study involves around 400 youths, the majority of whom are Muslims. Further, the study employs Structural Equation Modelling (SEM) and logistic regression to analyse the influence of socio-demographic variables (gender, religion, marital status, education, employment, religion and income) on the intention to invest through P2P lending. The results of the study indicate that intention to invest in P2P lending is positively correlated and influenced by the attitude variable, which is itself influenced by factors including perceived ease of use, knowledge and trust in P2P lending. The results imply that the potential of youth to invest in P2P lending might be enhanced by improving technology (ease of use), literacy and trust in P2P lending. Moreover, it is suggested that those most interested in and more likely to invest through P2P lending are Muslims, have higher education and have higher incomes. With better literacy and marketing programmes, these groups could be targeted by P2P lending platforms to become potential investors. Lastly, the findings are expected to contribute to Islamic finance concepts and practices, particularly in the context of Indonesia.

Legal Protection of Parties in Online Credit Agreement (Peer to Peer Lending) A Case Study of PT Vcard Technology Indonesia

The development of digital economy has led people to adapt to the use of services in information-technology-based loan or peer-to-peer lending. In early 2019, the V-loan case attracted attention of many people. The case has made debtors depressed, removed from their own houses, etc. Some debtors even were fired from works. In a case, the loan provider misused debtors’ personal data in debtors’ cell phones. The loan provider created WhatsApp groups containing all debtors’ contacts, including the debtors. Then, they uploaded pornographic content. Their objective was to defame debtors. Parties involved in loan agreement should adhere rules and arrange for reasonable loan. To discuss this matter, it is necessary to review agreement based on the Law on Electronic Information and Transaction and the Regulation of Financial Services Authority number 77 of 2016. The study focused on legal protection of parties involving in P2P lending activities. The credit agreement of peer-to-peer lending is considered valid if it is based on Article 47 of the Government Regulation number 82 of 2016. Standard contract must be based on Article 20 of the Regulation of Financial Services Authority number 77 of 2016. Electronic signature is also required based on Article 41 of the Regulation. In addition, the application of information technology and electronic transactions must be carried out based on the principles of legal certainty, benefits, good faith, and the freedom of choice of technology based on Article 3 of Law Number 19 of 2016. Principles and objectives are fundamental elements of legal certainty. Therefore, organizer and the government must protect user of peer-to-peer lending.

A Peer-to-Peer Lending Methods in Management of Zakat Funds through Sharia Financial Institutions

The gap of living standards in society should be minimized through the potential of zakat in Indonesia. Indonesian population has recorded by the Central Bureau of Statistics, in March 2018 amounted to 265 million and was expected to reach 271 million by 2020, then the poor society in Indonesia were 25.95 million people. Correspondingly, the dominance of Muslims in Indonesia makes zakat as a potential welfare instrument.The study was conducted by PIRAC noted that, the potential of Zakat funds amounting to 20 billion in Indonesia. Where the average person per year has the potential to spend Rp. 557.267. However, this potential has not been able to be achieved by BAZNAS. Many destitute and poor groups from year to year remain status as mustahik. Among the obstacles faced was located in the management and distribution of zakat funds. This study aims to examine the management and distribution model of ZAKAT through Islamic Financial Institutions (LKS) using Peer to Peer Lending (P2PL) methods. With a qualitative descriptive approach, zakat funds could be managed by LKS institutions with this method, because P2PL schemes are inclusive in managing zakat funds. In that management, the funds awere divided into two, namely consumptive and productive funds. By LAZ through LKS the productive funds were managed with management and products contained in the LKS. One of the supporting instruments is halal investment. By using methods P2PL investment, zakat funds can grow each month with little downside risk. In line with the development of the Financial Tecnogy (FinTech), LAZ with LKS can work together in the utilization of information technology to manage and distribute zakat funds to boost the economy and reduce mustahik in Indonesia.
 Keywords: P2PL, Zakat, Platform, Investment, LKS

THE LEGAL PROTECTION OF LENDERS IN PEER TO PEER LENDING SYSTEM

Financial technology based on Peer to Peer Lending is one of the new breakthroughs in financial services institutions in Indonesia. The peer to peer lending platforms are essentially online markets that match the supply and demand of funds as one of the alternative financing mechanisms for individual or business. But there is still few of regulation regarding peer to peer lending. We address two questions by theoretical legal research by examining secondary data through literature studies. First, the mechanism of credit agreements with a peer to peer lending; second, analyze lender’s legal protection in credit agreements in peer to peer lending. Based on the the research, we found that the mechanism of lending through a peer to peer lending credit agreement is in line with Financial Services Authority (Otoritas Jasa Keuangan - OJK) Regulation No. 77/POJK.01/2016 concerning Information Technology-Based Lending and Borrowing Services. Futhermore, the protection of legal lenders peer to peer lending from the aspect of law public has been sufficient but in private law, OJK has not been able to provide maximum protection.

Model Financial Dan Teknologi (Fintech) Membantu Permasalahan Modal Wirausaha UMKM Di Indonesia

The objectives of this study are (1) to find out the effect of technology-based financing models in helping entrepreneurial capital problems in society, Indonesia, (2) Knowing the types of technology-based financing models to help entrepreneurial capital problems in society, Indonesia, (3) Helping MSMEs capital in the future, (4) Helping solutions to business capital problems in entrepreneurial activities. Qualitative descriptive research is aimed at describing and describing existing phenomena, both natural and human engineering, which pay more attention to the characteristics, quality, and interrelationship between activities. In addition, this study does not provide treatment, manipulation or alteration on the variables studied, but describes a condition that is. Data collection techniques are derived from secondary data while the research instrument utilizing the results of the research that has been done both comes from journals, the Internet and books. From several research results illustrate that: (1) activities related to finance and technology are indeed needed by MSMEs with the current situation, (2) There is a relationship between financial and technological models (fintech) in helping MSME entrepreneurial capital problems, (3) Models financial and technology (fintech) consists of several kinds, among others: (a) crowd funding and peer to peer lending, (b) Market aggregator, (c) Risk and Investment Management and (d) Payment, settlement and clearing. (4) The results of research that greatly help MSME entrepreneurs in obtaining capital to maintain and improve business are financial and technology models (fintech) which lead to Crowd funding and Peer to Peer (P2P) lending, (5 in Indonesia are more familiar with P2P where has been implemented in activities including: (a) Agricultural Capital Startup, (b) Livestock Capital Startup and (c) Fisheries Capital Startup, (6) Future capital challenges have definite answers to the development of alias finance and technology fintech.

Peer to Peer (P2P) Lending Problems and Potential Solutions: A Systematic Literature Review

There is a growing Financial Technology (Fintech) business model, such as Peer to Peer (P2P) Lending. P2P Lending allows individuals and businesses to borrow and lend money to each other. In its development, China has become the market with the most P2P lending platforms. However, there is a moral hazard that makes this business need to be monitored. This threat begins with verification of the borrower’s data that is not appropriate. Whereas in Indonesia Fintech P2P Lending has received special attention, because its regulations and policies have not matured yet. Besides, P2P Lending is considered as a new business to flourish. Consequently, it requires investigation on problems from the implementation of the P2P Lending. This study aims to identify problems in P2P Lending and present alternative technical and non-technical solutions to the problems. By implementing the Kitchenham Systematic Literature Review (SLR) approach from the ACM, AIS, IEEE, SCOPUS, and Science Direct databases, this research finds a rich picture, creates a table of problem identification and alternative solutions.

A Brief Analysis of Peer to Peer (P2P) Lending in India

Rapidly changing technology is playing a very important role in all the spheres of human life. The financial sector is not an exception to it. In the last few years, however, innovations in IT and development of new digital tools and technologies have simplified the way consumers access banking and financial services. Peer-to-peer lending, also known as P2P lending, is one of the emerging financial products which utilises online services for lending without any intermediation of banking institution. P2P lending is a form of private lending which is not a new model; it has been in vogue since centauries. Private lending is a century old practice and initially started out as relatively simple system for the purpose of facilitating loans between individuals but with the passage of the time, with the advent of technology, it has grown into a complex economy of technology and institution. What is so unique about P2P lending is the use of Internet online platform for the lending process. Though P2P lending is in its nascent stage and credit available through it is very small in comparison to total credit disbursed through banking system, this practice has attracted the attention of public significantly across the globe. The main objective of this article is to analyses the evolution, advantages, relevance and challenges faced by P2P lending model in India. Besides, an attempt has been made to suggest few measures for its healthy and sustainable growth in years to come.

Islamic Online P2P Lending Platform

Peer to peer (P2P) lending allows people with fund surplus to lend to people who need funds via online platforms. Those who need fund become able to choose the most suitable fund provider; lender. In this type of intermediation, banks are out of the equation, and online platforms bring together the ones in need with the ones with surplus funds. Those in need of funding can communicate directly with the people they will borrow while they become able to obtain funds at cheaper costs. On the other hand, those wishing to lend can obtain higher returns compared to they would obtain by making a deposit in a bank. Lenders have the opportunity to choose whom they will lend to, or they can determine the desired interest rate based on the type of risk they undertake. Islamic P2P lending model; unlike conventional banking; is based on profit-loss partnership, requires a product of financing to trade as a physical good or service. In this study, how to create such a digital platform is explained from the business and technical aspects. With the platform implemented, P2P lending is fully digitally operated, and all processes are performed automatically on this platform.

Platform Competition in Peer-to-Peer Lending Considering Risk Control Ability

As a new e-commerce phenomenon in financing, peer to peer (P2P) lending has received increased attention recently. For P2P lending platforms, risk control ability (i.e., the ability to accurately assess and screen borrowers to control the credit risk of loans) is a competitive differentiator. The paper models a three-stage game to investigate optimal risk control ability and corresponding optimal prices of P2P lending platforms under different tariffs and agents’ homing choices. Risk-price coefficients for lenders and borrowers are introduced to measure the impact of risk control ability on prices, where higher risk-price coefficients indicate that prices are more sensitive to risk control ability. Moreover, the paper investigates the role of platforms’ scales in deciding optimal risk control ability, prices and market shares. To our best knowledge, this is the first theoretical paper to study the competition in P2P lending considering risk control ability based on game theory. The analytical results show that: 1) In equilibrium, optimal risk control ability decreases in risk-price coefficients; 2) The risk-price coefficient for lenders contributes less than that for borrowers to optimal risk control ability if some lenders multi-home; 3) Smaller platforms have higher risk control ability, prices and attract more borrowers than larger platforms under specific conditions.

HUBUNGAN HUKUM PARA PIHAK DALAM PEER TO PEER LENDING

The development of digital world has provided various services that are beneficial for the community, one of which is the presence of information technology-based lending and borrowing services or known as peer to peer lending. However, the current applicable regulations have not clearly explained the construction of the legal relations among the parties involved in peer to peer lending platform. Regarding the fact that some peer to peer lending services are similar to those of banks, the Financial Services Authority (OJK) is required to affirm the construction of the legal relations among parties so as to create legal certainty. Based on this explanation, there is a question: how is the Legal Relation among the Parties involved in Peer To Peer Lending in terms of the Legal Certainty for these Parties. This study used a normative method. The results showed that peer to peer lending services providers are not banks that collect funds from the community and distribute them to the community. Therefore, the legal relation among the parties involved in peer to peer lending shall be differentiated from the legal relations among the parties involved in banking sector, especially in the business activities of distributing funds through credit or financing agreements. The legal certainty in peer to peer lending shall be fulfilled so that peer to peer lending business activities are not categorized as an illegal bank and so that this business is able to provide legal standing for all the parties .

Encouraging Microcredit through Group Guarantee Loan Moder : The Success Story of MEKAAR Program in Indonesia

In 2015, PT Permodalan Nasional Madani/PNM (Persero) initiated the establishment of Mekaar, a state-owned financing product targeting the pre-prosperous micro business sector. Among all the local organizations that provide microcredit service for the poor, Mekaar is considered as the nearest to the poor, since the program is targeted productive poor women with a credit amount of only IDR2 million (around US$150 in average) per person. With its unique peer-lending model, Mekaar has successfully reached more than 1,300,000 customers within two years of its establishment. The peer-lending model was originated from microcredit practice in Bangladesh; however, PT PNM has been successful in adjusting the peer-lending model with Indonesian culture and market through their Mekaar programs. In this article, we examine how Mekaar penetrates Indonesian pre-prosperous market with ultra microfinancing. The information presented in this article is collected primarily from field observation to several Mekaar’s branches and interview with the key person in those branches. First, we presented an overview of PT PNM, an Indonesian state-owned company that created Mekaar program, including its vision and mission. Then, we evaluate Mekaar’s loan product and how PT PNM satisfies the funding needs for Mekaar program. We also evaluate characteristics of Mekaar’s target market, Mekaar’s peer lending model, and the role of Account Officer as a facilitator between the lender and the borrowers in Mekaar’s case. Finally, we evaluate the impact of Mekaar’s program and provide consideration related to future planning of Mekaar.

Examining the Determinants of the Interest Rate of the Online Peer to Peer Loans in China

Peer to Peer (P2P) lending is a new business model. People lend money to borrowers through internet where they judge the borrowers by information provided by the website. This paper aims to find how age, gender, and location influence the interest rate of a P2P loan in China. By exploiting the unique data of Paipaidai, which is one of the largest P2P website in China, we find that borrowers from more developed area (in terms of GDP) need to pay higher interest rate to get a loan. Male borrowers need to pay higher interest rate to finance the loan. Young people need to pay higher interest rate in order to get their loan.

Modelling Integration of System Dinamics and Game Theory for of Financial Technology Peer to Peer Lending Industry

In Indonesia, internet users from 2013 to 2018 have increased about 52%. This growth indicates that people behaviour change in many aspects of life including in economy. One example is (Fintech P2P Lending). P2P lending is a service that offers online borrowing, lenders can loan to small business or individuals. This is in line with the Indonesia Financial Services Sector Master Plan 2015-2019. Indonesia support the rapid growth of the financial technology ecosystem, but there is need good understanding between related parties such as P2P Lending companies, lenders and borrowers. A system dynamics act as calculators to takes value to fill payoff table in game theory. Integration of system dynamics and game theory can produce the best strategy for Fintech P2P Lending in running its business while considering profit for lenders and borrowers. The best strategy is known by use non-cooperative and cooperative game theory. The result shown the best strategy for each player with non-cooperative game is when the company chooses a high level of profit margin, borrower chooses low level of debt time, and lender chooses high level of ROI. In cooperative game, the best strategy is when the company chooses a high level of profit margin, borrower chooses low level of debt time, and lender chooses low level of ROI.

An overview of peer to peer (P2P) lending

An overview of peer to peer (P2P) lending

Herding and Capital Allocation Efficiency: Evidence from Peer Lending

Using bid-level data from a large U.S. peer-to-peer lending platform, we document that an average lender has strong herding tendencies: capital flow to a listing increases exponentially as the listing attracts more capital. However, loans funded in explosive bidding auctions do not show superior performance, suggesting that herding does not improve capital allocation efficiency. Rather, herders amplify the effect of random early bidding on the listing's funding success and skew capital allocation in the cross-section of listings. In particular, all else equal, listings started at times of exogenously lower lender activity on the platform are less likely to be funded. In investor heterogeneity analysis, we find that propensity to follow or lead is a persistent investor characteristic and that leaders realize better performance. Overall, this study highlights an important non-fundamental factor of capital allocation in transparent credit markets.