Online or Offline?: The Rise of â€œPeer-to-Peerâ€ Lending in Microfinance
Arvind Ashta () and
Djamchid Assadi Additional contact information Susan Johnson: University of Bath, UK
Djamchid Assadi: Burgundy School of Business (Groupe ESC Dijon-Bourgogne), France
Over the past five years, â€œpeer-to-peerâ€ lending websites have become a new approach to mobilizing funds for on-lending to impoverished people in developing countries (microfinance) and domestic markets. In this paper, the authors review these developments and use the analytical lens of asymmetric information and transactions costs to explain the characteristics of the different models in operation. The authors find that â€œpeer-to-peerâ€ lending is more of an aspiration than a reality. Although web 2.0 technologies have offered new means of mobilizing funds, the borrowing mechanisms at work follow mainstream conventional approaches to the management of lending.