The Role of Peer-to-Peer Lending Platform on Financial Inclusion: Evidence from Microfinance in Rural Indonesia

EasyChair Preprint 10832

Abstract

Peer-to-peer (P2P) lending platforms have been considered to overcome restrictions of financial inclusion due to geographical exclusion and high financial transaction costs in developing countries. P2P platforms potentially reshape the financial ecosystem in the supply-demand of microfinance. However, the existing literature on digital transformation and financial inclusion falls short of identifying the role of the P2P model and presenting a balanced view of the barriers and impact of such transformation to financial services serving rural areas in developing countries. This research thus aims to understand the role of P2P lending fintech in transforming the supply (lenders)-demand (borrowers) sides of rural microfinancing in enabling financial inclusion. The data are collected from 65 participants by employing semi-structured interviews, participant observations, and focus groups. Drawing on a qualitative study of a peer-to-peer (P2P) lending platform in Indonesia, this paper demonstrates the important roles of a P2P platform in improving efficiency, growth and sustainability in accelerating financial inclusion. The findings also address the barriers and impacts of transformation to further scale up this nascent business model. This work contributes to the digital transformation and financial inclusion literature by proposing theorisation based on the empirical ground evidence in Indonesia.

Keyphrases: Digital Transformation, Financial Inclusion, Microfinance, Peer-to-peer lending platform

@booklet{EasyChair:10832,
  author    = {Larastri Kumaralalita},
  title     = {The Role of Peer-to-Peer Lending Platform on Financial Inclusion: Evidence from Microfinance in Rural Indonesia},
  howpublished = {EasyChair Preprint 10832},
  year      = {EasyChair, 2023}}