Peer-to-peer lending (P2P) as disruptive, but complementary in Covid-19 exogenous shock
Abstract
The purpose of this study is to examine the effect of P2P lending on bank credit in each type/segment of banking credit consisting of working capital credit, investment credit, and consumer credit in the period before and during the occurrence of the Covid-19 exogenous shock. Examining the effect of P2P lending on various types of bank loans is important because there is no conclusive evidence of whether P2P lending substitutes or complements various conventional bank loans. The Covid-19 pandemic impairs the income of many people and accelerates the use of digital technology in most daily activities including banking. Due to economic contraction during the outbreak, the government requires banks to relax the loan covenants. Therefore, P2P lending that provides flexibility might complement bank loans during the Covid-19 pandemic. The test in this study uses panel regression and is carried out by separating the period before (July 2019–March 2020), and during (July 2020–March 2021) the Covid-19 pandemic. The results show that P2P lending was disruptive for bank loans before the pandemic and turned to be complementary during the pandemic, it might be due to P2P lending flexibility complementing the bank credit relaxation during the pandemic.
Keyword : P2P lending, banking, FinTech, disruptive innovation, exogenous shock, Covid-19, substitution, complement
How to Cite
Kohardinata, C., Suhardianto, N., & Tjahjadi, B. (2024). Peer-to-peer lending (P2P) as disruptive, but complementary in Covid-19 exogenous shock. Business: Theory and Practice, 25(1), 241–251. https://doi.org/10.3846/btp.2024.16584
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Aaker, D. A., & Keller, K. L. (1990). Consumer evaluations of brand extensions. Journal of Marketing, 54(1), 27–41. https://doi.org/10.2307/1252171
Anagnostopoulos, I. (2018). Fintech and regtech: Impact on regulators and banks. Journal of Economics and Business, 100, 7–25. https://doi.org/10.1016/j.jeconbus.2018.07.003
Brown, R. S., & Kline, W. A. (2020). Exogenous shocks and managerial preparedness: A study of U.S. airlines’ environmental scanning before the onset of the COVID-19 pandemic. Journal of Air Transport Management, 89(June), 1–9. https://doi.org/10.1016/j.jairtraman.2020.101899
Chandler, J. A., Short, J. C., & Wolfe, M. T. (2021). Finding the crowd after exogenous shocks: Exploring the future of crowdfunding. Journal of Business Venturing Insights, 15(March), 1–6. https://doi.org/10.1016/j.jbvi.2021.e00245
Chauhan, Y., & Kumar, S. B. (2019). Does accounting comparability alleviate the informational disadvantage of foreign investors? International Review of Economics and Finance, 60 December 2018, 114–129. https://doi.org/10.1016/j.iref.2018.12.018
Christensen, C. M. (1997). Innovator’s dilemma. Harvard Business School Press.
Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. E. (2018). Disruptive innovation: An intellectual history and directions for future research. Journal of Management Studies, 55(7), 1043–1078. https://doi.org/10.1111/joms.12349
Christensen, C. M., Raynor, M., & McDonald, R. (2015). What is disruptive innovation? Harvard Business Review, December.
Dang, V. D. (2019). The effects of loan growth on bank performance: Evidence from Vietnam. Management Science Letters, 9, 899–910. https://doi.org/10.5267/j.msl.2019.2.012
Doan, T., Nguyen, S., Vu, H., Tran, T., & Lim, S. (2015). Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam’s manufacturing sector. The Journal of International Trade & Economic Development, May, 25(1), 37–41. https://doi.org/10.1080/09638199.2015.1035739
Fu, J., & Mishra, M. (2022). Fintech in the time of COVID-19: Technological adoption during crises. Journal of Financial Intermediation, 50, 1–30. https://doi.org/10.1016/j.jfi.2021.100945
Goldstein, I., Jiang, W., & Karolyi, G. A. (2019). To FinTech and beyond. Review of Financial Studies, 32(5), 1647–1661. https://doi.org/10.1093/rfs/hhz025
Gomber, P., Koch, J.-A., & Siering, M. (2017). Digital finance and FinTech: Current research and future research directions. Journal of Business Economics, 87(5), 537–580. https://doi.org/10.1007/s11573-017-0852-x
Hasan, R., Ashfaq, M., & Shao, L. (2021). Evaluating drivers of Fintech adoption in the Netherlands. Global Business Review, 1–14. https://doi.org/10.1177/09721509211027402
Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281–312. https://doi.org/10.1177/1536867X0700700301
Jagtiani, J., & John, K. (2018). Fintech: The impact on consumers and regulatory responses. Journal of Economics and Business, 100, 1–6. https://doi.org/10.1016/j.jeconbus.2018.11.002
Jagtiani, J., & Lemieux, C. (2018). Do fintech lenders penetrate areas that are underserved by traditional banks? Journal of Economics and Business, 100(March), 43–54. https://doi.org/10.1016/j.jeconbus.2018.03.001
Jiang, C., Xu, Q., Zhang, W., Li, M., & Yang, S. (2018). Does automatic bidding mechanism affect herding behavior? Evidence from online P2P lending in China. Journal of Behavioral and Experimental Finance, 20, 39–44. https://doi.org/10.1016/j.jbef.2018.07.001
Kohardinata, C., Soewarno, N., & Tjahjadi, B. (2020a). Indonesian peer to peer lending (P2P) at entrant’s disruptive trajectory. Business: Theory and Practice, 21(1), 104–114. https://doi.org/10.3846/btp.2020.11171
Kohardinata, C., Suhardianto, N., & Tjahjadi, B. (2020b). Peer-to-peer lending platform: From substitution to complementary for rural banks. Business: Theory and Practice, 21(2), 713–722. https://doi.org/10.3846/btp.2020.12606
Kuckertz, A., Brändle, L., Gaudig, A., Hinderer, S., Morales Reyes, C. A., Prochotta, A., Steinbrink, K. M., & Berger, E. S. C. (2020). Startups in times of crisis – A rapid response to the COVID-19 pandemic. Journal of Business Venturing Insights, 13(April). https://doi.org/10.1016/j.jbvi.2020.e00169
Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003
Levin, J., & Milgrom, P. (2004). Consumer theory. https://web.stanford.edu/~jdlevin/Econ 202/Consumer Theory.pdf
Liu, J., Li, X., & Wang, S. (2020). What have we learnt from 10 years of fintech research? A scientometric analysis. Technological Forecasting and Social Change, 155(March), 1–12. https://doi.org/10.1016/j.techfore.2020.120022
Ma, L., Zhao, X., Zhou, Z., & Liu, Y. (2018). A new aspect on P2P online lending default prediction using meta-level phone usage data in China. Decision Support Systems, 111(November 2017), 60–71. https://doi.org/10.1016/j.dss.2018.05.001
Miyajima, K. (2020). What influences bank lending in Saudi Arabia? Islamic Economic Studies, 27(2), 125–155. https://doi.org/10.1108/IES-07-2019-0018
Montgomery, N., Squires, G., & Syed, I. (2018). Disruptive potential of real estate crowdfunding in the real estate project finance industry A literature review. Property Management, 36(5), 597–619. https://doi.org/10.1108/PM-04-2018-0032
Nguyen, T. Le, Vu Van, H., Nguyen, L. D., & Tran, T. Q. (2017). Does rising import competition harm Vietnam’s local firm employment of the 2000s? Economic Research, 30(1), 1882–1895. https://doi.org/10.1080/1331677X.2017.1392883
Otoritas Jasa Keuangan. (2018). Ikhtisar Data Keuangan Fintech (Peer To Peer Lending) Periode Desember 2018. OJK.
Otoritas Jasa Keuangan. (2020a). Ikhtisar Data Keuangan Fintech (Peer To Peer Lending) Periode Desember 2020. OJK.
Otoritas Jasa Keuangan. (2020b). Perkembangan Fintech lending Desember 2020. OJK.
Phan, D. H. B., Narayan, P. K., Rahman, R. E., & Hutabarat, A. R. (2019). Do financial technology firms influence bank performance? Pacific-Basin Finance Journal, 62, 1–13. https://doi.org/10.1016/j.pacfin.2019.101210
Ryu, H.-S. (2018). What makes users willing or hesitant to use Fintech?: the moderating effect of user type. Industrial Management and Data Systems, 118(3), 541–569. https://doi.org/10.1108/IMDS-07-2017-0325
Shawtari, F. A. M. (2018). Ownership type, bank models, and bank performance: The case of the Yemeni banking sector. International Journal of Productivity and Performance Management, 67(8), 1271–1289. https://doi.org/10.1108/IJPPM-01-2018-0029
Soluk, J., Kammerlander, N., & De Massis, A. (2021). Exogenous shocks and the adaptive capacity of family firms: Exploring behavioral changes and digital technologies in the COVID-19 pandemic. R&D Management, 51(4), 364–380. https://doi.org/10.1111/radm.12471
Stern, C., Makinen, M., & Qian, Z. (2017). FinTechs in China – with a special focus on peer to peer lending. Journal of Chinese Economic and Foreign Trade Studies, 10(3), 215–228. https://doi.org/10.1108/JCEFTS-06-2017-0015
Tang, H. (2019). Peer-to-Peer lenders versus banks: Substitutes or complements? Review of Financial Studies, 32(5), 1900–1938. https://doi.org/10.1093/rfs/hhy137
Thakor, A. V. (2020). Fintech and banking: What do we know? Journal of Financial Intermediation, 41, 1–13. https://doi.org/10.1016/j.jfi.2019.100833
Wang, Q., Xiong, X., & Zheng, Z. (2021). Platform characteristics and online Peer-to-Peer Lending: Evidence from China. Finance Research Letters, 38(February), 1–7. https://doi.org/10.1016/j.frl.2020.101511
Zalan, T., & Toufaily, E. (2017). The promise of Fintech in emerging markets: Not as disruptive. Contemporary Economics, 11(4), 415–430.
Zhang, Z., Hu, W., & Chang, T. (2019). Nonlinear effects of P2P lending on bank loans in a Panel Smooth transition regression model. International Review of Economics and Finance, 59(August 2017), 468–473. https://doi.org/10.1016/j.iref.2018.10.010
Zhou, J., Li, W., Wang, J., Ding, S., & Xia, C. (2019). Default prediction in P2P lending from high-dimensional data based on machine learning. Physica A: Statistical Mechanics and Its Applications, 534, 1–11. https://doi.org/10.1016/j.physa.2019.122370
Anagnostopoulos, I. (2018). Fintech and regtech: Impact on regulators and banks. Journal of Economics and Business, 100, 7–25. https://doi.org/10.1016/j.jeconbus.2018.07.003
Brown, R. S., & Kline, W. A. (2020). Exogenous shocks and managerial preparedness: A study of U.S. airlines’ environmental scanning before the onset of the COVID-19 pandemic. Journal of Air Transport Management, 89(June), 1–9. https://doi.org/10.1016/j.jairtraman.2020.101899
Chandler, J. A., Short, J. C., & Wolfe, M. T. (2021). Finding the crowd after exogenous shocks: Exploring the future of crowdfunding. Journal of Business Venturing Insights, 15(March), 1–6. https://doi.org/10.1016/j.jbvi.2021.e00245
Chauhan, Y., & Kumar, S. B. (2019). Does accounting comparability alleviate the informational disadvantage of foreign investors? International Review of Economics and Finance, 60 December 2018, 114–129. https://doi.org/10.1016/j.iref.2018.12.018
Christensen, C. M. (1997). Innovator’s dilemma. Harvard Business School Press.
Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. E. (2018). Disruptive innovation: An intellectual history and directions for future research. Journal of Management Studies, 55(7), 1043–1078. https://doi.org/10.1111/joms.12349
Christensen, C. M., Raynor, M., & McDonald, R. (2015). What is disruptive innovation? Harvard Business Review, December.
Dang, V. D. (2019). The effects of loan growth on bank performance: Evidence from Vietnam. Management Science Letters, 9, 899–910. https://doi.org/10.5267/j.msl.2019.2.012
Doan, T., Nguyen, S., Vu, H., Tran, T., & Lim, S. (2015). Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam’s manufacturing sector. The Journal of International Trade & Economic Development, May, 25(1), 37–41. https://doi.org/10.1080/09638199.2015.1035739
Fu, J., & Mishra, M. (2022). Fintech in the time of COVID-19: Technological adoption during crises. Journal of Financial Intermediation, 50, 1–30. https://doi.org/10.1016/j.jfi.2021.100945
Goldstein, I., Jiang, W., & Karolyi, G. A. (2019). To FinTech and beyond. Review of Financial Studies, 32(5), 1647–1661. https://doi.org/10.1093/rfs/hhz025
Gomber, P., Koch, J.-A., & Siering, M. (2017). Digital finance and FinTech: Current research and future research directions. Journal of Business Economics, 87(5), 537–580. https://doi.org/10.1007/s11573-017-0852-x
Hasan, R., Ashfaq, M., & Shao, L. (2021). Evaluating drivers of Fintech adoption in the Netherlands. Global Business Review, 1–14. https://doi.org/10.1177/09721509211027402
Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281–312. https://doi.org/10.1177/1536867X0700700301
Jagtiani, J., & John, K. (2018). Fintech: The impact on consumers and regulatory responses. Journal of Economics and Business, 100, 1–6. https://doi.org/10.1016/j.jeconbus.2018.11.002
Jagtiani, J., & Lemieux, C. (2018). Do fintech lenders penetrate areas that are underserved by traditional banks? Journal of Economics and Business, 100(March), 43–54. https://doi.org/10.1016/j.jeconbus.2018.03.001
Jiang, C., Xu, Q., Zhang, W., Li, M., & Yang, S. (2018). Does automatic bidding mechanism affect herding behavior? Evidence from online P2P lending in China. Journal of Behavioral and Experimental Finance, 20, 39–44. https://doi.org/10.1016/j.jbef.2018.07.001
Kohardinata, C., Soewarno, N., & Tjahjadi, B. (2020a). Indonesian peer to peer lending (P2P) at entrant’s disruptive trajectory. Business: Theory and Practice, 21(1), 104–114. https://doi.org/10.3846/btp.2020.11171
Kohardinata, C., Suhardianto, N., & Tjahjadi, B. (2020b). Peer-to-peer lending platform: From substitution to complementary for rural banks. Business: Theory and Practice, 21(2), 713–722. https://doi.org/10.3846/btp.2020.12606
Kuckertz, A., Brändle, L., Gaudig, A., Hinderer, S., Morales Reyes, C. A., Prochotta, A., Steinbrink, K. M., & Berger, E. S. C. (2020). Startups in times of crisis – A rapid response to the COVID-19 pandemic. Journal of Business Venturing Insights, 13(April). https://doi.org/10.1016/j.jbvi.2020.e00169
Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003
Levin, J., & Milgrom, P. (2004). Consumer theory. https://web.stanford.edu/~jdlevin/Econ 202/Consumer Theory.pdf
Liu, J., Li, X., & Wang, S. (2020). What have we learnt from 10 years of fintech research? A scientometric analysis. Technological Forecasting and Social Change, 155(March), 1–12. https://doi.org/10.1016/j.techfore.2020.120022
Ma, L., Zhao, X., Zhou, Z., & Liu, Y. (2018). A new aspect on P2P online lending default prediction using meta-level phone usage data in China. Decision Support Systems, 111(November 2017), 60–71. https://doi.org/10.1016/j.dss.2018.05.001
Miyajima, K. (2020). What influences bank lending in Saudi Arabia? Islamic Economic Studies, 27(2), 125–155. https://doi.org/10.1108/IES-07-2019-0018
Montgomery, N., Squires, G., & Syed, I. (2018). Disruptive potential of real estate crowdfunding in the real estate project finance industry A literature review. Property Management, 36(5), 597–619. https://doi.org/10.1108/PM-04-2018-0032
Nguyen, T. Le, Vu Van, H., Nguyen, L. D., & Tran, T. Q. (2017). Does rising import competition harm Vietnam’s local firm employment of the 2000s? Economic Research, 30(1), 1882–1895. https://doi.org/10.1080/1331677X.2017.1392883
Otoritas Jasa Keuangan. (2018). Ikhtisar Data Keuangan Fintech (Peer To Peer Lending) Periode Desember 2018. OJK.
Otoritas Jasa Keuangan. (2020a). Ikhtisar Data Keuangan Fintech (Peer To Peer Lending) Periode Desember 2020. OJK.
Otoritas Jasa Keuangan. (2020b). Perkembangan Fintech lending Desember 2020. OJK.
Phan, D. H. B., Narayan, P. K., Rahman, R. E., & Hutabarat, A. R. (2019). Do financial technology firms influence bank performance? Pacific-Basin Finance Journal, 62, 1–13. https://doi.org/10.1016/j.pacfin.2019.101210
Ryu, H.-S. (2018). What makes users willing or hesitant to use Fintech?: the moderating effect of user type. Industrial Management and Data Systems, 118(3), 541–569. https://doi.org/10.1108/IMDS-07-2017-0325
Shawtari, F. A. M. (2018). Ownership type, bank models, and bank performance: The case of the Yemeni banking sector. International Journal of Productivity and Performance Management, 67(8), 1271–1289. https://doi.org/10.1108/IJPPM-01-2018-0029
Soluk, J., Kammerlander, N., & De Massis, A. (2021). Exogenous shocks and the adaptive capacity of family firms: Exploring behavioral changes and digital technologies in the COVID-19 pandemic. R&D Management, 51(4), 364–380. https://doi.org/10.1111/radm.12471
Stern, C., Makinen, M., & Qian, Z. (2017). FinTechs in China – with a special focus on peer to peer lending. Journal of Chinese Economic and Foreign Trade Studies, 10(3), 215–228. https://doi.org/10.1108/JCEFTS-06-2017-0015
Tang, H. (2019). Peer-to-Peer lenders versus banks: Substitutes or complements? Review of Financial Studies, 32(5), 1900–1938. https://doi.org/10.1093/rfs/hhy137
Thakor, A. V. (2020). Fintech and banking: What do we know? Journal of Financial Intermediation, 41, 1–13. https://doi.org/10.1016/j.jfi.2019.100833
Wang, Q., Xiong, X., & Zheng, Z. (2021). Platform characteristics and online Peer-to-Peer Lending: Evidence from China. Finance Research Letters, 38(February), 1–7. https://doi.org/10.1016/j.frl.2020.101511
Zalan, T., & Toufaily, E. (2017). The promise of Fintech in emerging markets: Not as disruptive. Contemporary Economics, 11(4), 415–430.
Zhang, Z., Hu, W., & Chang, T. (2019). Nonlinear effects of P2P lending on bank loans in a Panel Smooth transition regression model. International Review of Economics and Finance, 59(August 2017), 468–473. https://doi.org/10.1016/j.iref.2018.10.010
Zhou, J., Li, W., Wang, J., Ding, S., & Xia, C. (2019). Default prediction in P2P lending from high-dimensional data based on machine learning. Physica A: Statistical Mechanics and Its Applications, 534, 1–11. https://doi.org/10.1016/j.physa.2019.122370