Peer-to-peer Lending’s Customer Profile: Empirical Research on Indonesia’s Financial Technology Market

Abstract

The peer-to-peer lending industry has grown very rapidly in Indonesia over the last three years, offering loans to customers by leveraging technology. This study analyzes four factors associated with customers applying for loans through this channel: banking access, financial technology awareness, regulatory trust, and demographic characteristics. Using a logit regression over a total sample of 298 survey respondents in Indonesia, the empirical results show that customers with access to bank loans, financial technology awareness, and trust of regulators are those who are most likely to borrow from peer-to-peer lending platforms. Given the rapid growth of the industry and regulatory trust is associated with applying for loans, regulators should consider licensing or registering peer-to-peer lending platforms on a regular basis.