Why do peer-to-peer (P2P) lending platforms fail? The gap between P2P lenders' preferences and the platforms’ intentions

Galit Klein (), Zeev Shtudiner and Moti Zwilling ()
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Galit Klein: Ariel University
Moti Zwilling: Ariel University

Electronic Commerce Research, 2023, vol. 23, issue 2, No 4, 709-738

Abstract: Abstract In the current study, we examine why peer-to-peer (P2P) lending platforms play only a minor role in the finance industry in Israel, compared to the traditional banking system. We conducted two studies and attempted to discover if a discrepancy exists between the lenders' preferences and the platforms’ incentives. In the first study, we conducted a conjoint analysis to examine the impact of lenders' decisions to invest through P2P platforms. The second study examines the factors in which platforms use to determine the lending interest rate for loans. We found that although lenders wish to decrease their risk and guarantee their investment, P2P companies encourage riskier borrowers. This contradiction between the priorities of the lenders and those of the platforms may explain why the non-users consider P2P lending to be a high risk. We offer several suggestions to increase the attractiveness of the Fintech and lending platforms industry.

Keywords: P2P lending platforms; Investments; Lenders; Finance institutions; Fintech (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10660-021-09489-6

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