IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v56y2020i2p351-369.html
   My bibliography  Save this article

What Determine Loan Rate and Default Status in Financial Technology Online Direct Lending? Evidence from Indonesia

Author

Listed:
  • Wimboh Santoso
  • Irwan Trinugroho
  • Tastaftiyan Risfandy

Abstract

Using a large-scale dataset from three leading online peer-to-peer (P2P) lending platforms in Indonesia from 2014 to 2018, we investigate the determinants of platform interest rate and borrowers’ default status. Our result shows that loan and borrowers’ specific factors are significantly associated with the loan rate and loan default, although the relation could differ from one platform to another. Our empirical result shows that platforms focused on very small loan for microbusiness increase their interest rate after the introduction of formal regulation. It could be because of the increase of the borrowers requiring a very small amount of loan relatively much more than the number of lenders. The shortfall of supply then drives the increase in loan rate. Some policy implications are discussed.

Suggested Citation

  • Wimboh Santoso & Irwan Trinugroho & Tastaftiyan Risfandy, 2020. "What Determine Loan Rate and Default Status in Financial Technology Online Direct Lending? Evidence from Indonesia," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(2), pages 351-369, January.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:2:p:351-369
    DOI: 10.1080/1540496X.2019.1605595
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2019.1605595
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2019.1605595?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chong, Zhaohui & Wei, Xiaolin, 2023. "Exploring the spatial linkage network of peer-to-peer lending in China," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 630(C).
    2. Sha, Yezhou, 2022. "Rating manipulation and creditworthiness for platform economy: Evidence from peer-to-peer lending," International Review of Financial Analysis, Elsevier, vol. 84(C).
    3. Zhao, Chengguo & Li, Meng & Wang, Jun & Ma, Shujian, 2021. "The mechanism of credit risk contagion among internet P2P lending platforms based on a SEIR model with time-lag," Research in International Business and Finance, Elsevier, vol. 57(C).
    4. Wang, Yao & Drabek, Zdenek & Wang, Zhengwei, 2022. "The role of social and psychological related soft information in credit analysis: Evidence from a Fintech Company," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    5. Hasan Al-Banna & Izra Berakon, 2024. "From bank to P2P lending: switching intention of SME’s: evidence from Indonesia," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 568-581, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:56:y:2020:i:2:p:351-369. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.