Preliminary research of P2P lending bankruptcy in emerging country: the role of financial literacy

Hasan Al Banna

Journal of Electronic Business & Digital Economics, 2025, vol. 5, issue 1, 69-89

Abstract: PurposeThere is a significant drop in the number of registered peer-to-peer (P2P) lending in Indonesia roughly 63% from 2020 to 2024. On the other hand, the failure of P2P lending influences the stability of the financial system, while financial literacy influences financial stability. Therefore, the study aims to evaluate the role of financial literacy on P2P lending bankruptcy in Indonesia.Design/methodology/approachThe autoregressive distributed lags (ARDL) are applied to measure the cointegration. Monthly time series data are used from April 2021 to April 2024.FindingsThe findings show that lender financial literacy, return on equity, outstanding loans and loan disbursement negatively influenced P2P lending bankruptcy in short-term periods. Moreover, the stability of P2P lending in the past periods has negatively influenced the stability of P2P lending in recent times. In contrast, borrower financial literacy and the funds provided by the lender positively influenced the bankruptcy of P2P lending in short-term periods. Meanwhile, the fund provided by the lender is the only construct that positively influences the P2P lending stability in short- and long-term periods. Further policy discussion and policy recommendations are available in the paper.Originality/valueThis article is the first study to evaluate the P2P lending bankruptcy in Indonesia using ARDL model.

Keywords: Zscore; P2P lending bankruptcy; Financial literacy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jebdep:jebde-12-2024-0055

DOI: 10.1108/JEBDE-12-2024-0055

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