Determinants of peer-topeer (P2P) successful fund lending in Malaysia

Peer-to-peer (P2P) lending is a financial technology (FinTech) innovation facilitated by online platforms. It relies heavily on the information provided to be extracted by investors and borrowers for successful P2P fund lending through the proposed campaigns. This study aims to determine factors contributing to lending approval on the P2P lending platform in Malaysia. The challenges of information disparities and platform sustainability in different economic conditions have been the drives for the study to be addressed in a unified model. An autoregressive distributed lag (ARDL) method was used to show how the factors that lead to successful P2P lending have different long- and short-term effects. Utilizing the monthly data covered the whole Malaysia P2P lending platforms stretching from 2017 to 2022, a segregation based on P2P financing types and sectoral industries is also being investigated. The results can be divided into two perspectives based on the analysis of the variables. The internal factors include platform interest rates, loan tenure, and investment size. Whereas the external determinants encompass variables such as base lending rates (BLR), inflation, and economic conditions. The findings mainly support the information asymmetry theory, in which the disparity of information on the determinants reacts differently towards successful P2P fund lending. In addition, the complexity of financial instability theory proxied by the effect of economic conditions has detailed the optimistic prospects for lending behaviour in Malaysia’s P2P platform.