<scp>Peer‐to‐peer</scp> lending and financial inclusion with altruistic investors

Berentsen, Aleksander; Markheim, Marina

doi:10.1111/irfi.12333

Cited by 10 publications

(10 citation statements)

References 12 publications

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“…However, according to Klafft (2009), borrowers with weak credit ratings, who cannot get funding through a traditional banking route, still struggle to secure loans in P2P platforms. More recently, Berentsen and Markheim (2021) find that altruistic investors do not improve financial inclusion and just offer lower borrowing rates, and Berns et al. (2020) find that pro-social P2P lenders are driven by strategic motives.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, according to Klafft (2009), borrowers with Peer-to-peer lending weak credit ratings, who cannot get funding through a traditional banking route, still struggle to secure loans in P2P platforms. More recently, Berentsen and Markheim (2021) find that altruistic investors do not improve financial inclusion and just offer lower borrowing rates, and Berns et al (2020) find that pro-social P2P lenders are driven by strategic motives. More specifically, Berns et al (2020) find that lenders respond positively to signals of quality and low risk, and that projects that are high on both financial and social appeal receive the highest average amount of funding.…”

Section: Pro-social P2p Lendingmentioning

confidence: 99%

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Financial literacy in for-profit vs pro-social peer-to-peer lending

Gonzalez

2022

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PurposePeer-to-peer (P2P) lending facilitates direct online lending and aims to provide financial inclusion and investment returns. Lender goals range from for-profit to pro-social and objective information is limited, which highlights the need to examine heuristics.Design/methodology/approachThis study examines 1,347 lending decisions by finance students on a mock P2P site. Testimonials were used to randomly condition the financially literate lenders towards for-profit or pro-social decision-making. Each investor evaluated three loans. The three loan applications were identical except for a female or male headshot (vs an icon) and random reports of 50% funding for the female or male loan in 3 days (vs 11 days for opposite gender and 7 for icon). Previous research surveys students on a mock platform (Gonzalez, 2020) and reports similar heuristics and lifelike decisions in student and general population samples (Gonzalez and Komarova, 2014).FindingsLenders randomly conditioned towards pro-social lending state lower trust in borrowers. However, pro-social investors state lower risk in P2P lending and higher financial literacy. Second, pro-social investors are more confident when lending to borrowers highly trusted by other lenders, especially if the popular loan applicant is female. Third, pro-social conditioning increases lending to male applicants when the popular loan applicant is female. Fourth, pro-social investors who have experienced financial trauma have greater confidence in bad loan recovery.Originality/valueThis is the first study of heuristics in pro-social vs for-profit P2P lending. In addition, it shows that testimonials can effectively condition lending goals and affect trust and risk perceptions.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Pro-social P2p Lendingmentioning

confidence: 99%

Financial literacy in for-profit vs pro-social peer-to-peer lending

Gonzalez

2022

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“…Also, financial inclusion is measured using three parameters, namely (i) branch penetration, (ii) credit penetration, and iii) deposit penetration [10]. Berentsen and Markheim [19] studied the relationship of borrowing rates and financial inclusion on peer-to-peer lending. For financial inclusion, education is the most important thing, leading to access to formal financial services and lack of which forces people to resort to informal financial services [20].…”

Section: Financial Inclusionmentioning

confidence: 99%

Factors Contributing to Financial Literacy and Financial Inclusion among Women in Indian SHGs

Mishra¹,

Malik²,

Chitnis³

et al. 2021

ujaf

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The purpose of the study is to analyse the factors contributing to financial literacy and financial inclusion among women of self-help groups (SHGs) of Sisilo village in Balianta block of Bhubaneswar, India. A survey questionnaire was designed and administered to a sample of 100 women respondents in the age group of 18 to 59 years. The survey data were analysed using factorial analysis. Factor extraction was done by the method of principle component analysis. The three factors extracted which influenced financial literacy were identified as education level, awareness of bank and insurance products and household income. The four factors extracted which influenced financial inclusion were identified as product knowledge, risk level of products, insurance schemes for security, and availability of bank branch. A few of the factors are hindrances to financial literacy and financial inclusion which are gender difference, access to education, ethnicity, personal finance, lack of trust in financial institutions, distance and lack of proper guidance. The study will help bankers and policymakers to be aware of the factors that influence financial inclusion and financial literacy amongst women, and incorporate the same for implementing successful interventions for women SHGs in India.

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“…P2P Lending provides an opportunity for Indonesians who do not have access to formal financial institutions to obtain loans on simpler terms and without having to go directly to bank outlets (Suleiman, 2019). The P2P Lending platform is an alternative that plays an important role as a form of traditional credit intermediation for borrowers who need small-scale loans (Berentsen & Markheim, 2020). This platform opens opportunities to increase financial inclusion further and provide better terms for borrowers.…”

Section: Introductionmentioning

confidence: 99%

Financial Technology in Indonesia: Effect of Risk on Financial Performance in Peer-To-Peer Lending

Putri¹,

Wibisono²

2022

KINERJA

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This study aims to acquire empirical evidence related to the effect of risk on financial performance in peer-to-peer lending in Indonesia. By exploring the financial statements throughout 2019-2020. The test uses a panel data regression model, the Common Effect Model as the selected estimation regression model. Financial risk is measured by Operating Income Operating Expenses (BOPO), Net Interest Margin (NIM), Loan to Deposit Ratio (LDR), Debt to Asset Ratio (DAR), Debt to Equity Ratio (DER), and Capital Adequacy Ratio (CAR). In contrast, financial performance is measured by Return on Assets (ROA) and Return on Equity (ROE). The results of this study showed that the solvency risk projected by DAR, DER, and CAR had proven to influence the profitability of peer-to-peer lending in Indonesia projected by both ROA and ROE.

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Peer‐to‐peer lending and financial inclusion with altruistic investors

Cited by 10 publications

References 12 publications

Financial literacy in for-profit vs pro-social peer-to-peer lending

Financial literacy in for-profit vs pro-social peer-to-peer lending

Factors Contributing to Financial Literacy and Financial Inclusion among Women in Indian SHGs

Financial Technology in Indonesia: Effect of Risk on Financial Performance in Peer-To-Peer Lending

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