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Beyond banks: Navigating the shift to peer-to-peer lending for small enterprises

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  • Malkova, Alina
  • Weng, Alex

Abstract

This study sheds light on how non-traditional lending avenues, specifically peer-to-peer (P2P) lending platforms, influence the financing decisions of small businesses. It introduces a theoretical framework where borrowers weigh the option between opting for a cost-effective traditional bank loan versus an expensive option through crowdlending platforms. The findings suggest that crowdlending platforms become a more appealing choice in the event of credit supply disruptions in traditional banking sectors. Leveraging the phased introduction of mobility restrictions during the COVID-19 pandemic as a case study, our research demonstrates a noticeable pivot of small businesses towards alternative funding sources, such as P2P lending. These findings emphasize the value of offering a variety of financial tools to small businesses so they can weather economic storms.

Suggested Citation

  • Malkova, Alina & Weng, Alex, 2024. "Beyond banks: Navigating the shift to peer-to-peer lending for small enterprises," Research in Economics, Elsevier, vol. 78(4).
    • Handle: RePEc:eee:reecon:v:78:y:2024:i:4:s1090944324000668
    DOI: 10.1016/j.rie.2024.101002
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    More about this item

    Keywords

    Small business; Peer-to-peer lending; Lending during COVID-19;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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