Online social lending: Borrower-generated content

This article explores online social lending, an innovative venture that represents a reintermediation in financial services. Borrowers and lenders now have access to online financial information services such as Motley Fool, http://www.fool.com/ , and the opportunity to communicate directly with each other online, sharing user-generated content, in the spirit of Web 2.0. In this environment, new possibilities emerge. Drawing on the literature of community banks, finance, and online banking, we conducted a structurational analysis of ZOPA(2007) a newly founded venture in online social lending whereby borrower/lender interactions take place within an open and transparent environment using discussion boards and blogs. ZOPA offers a service as an intermediary but one that differs from the intermediating role played by a traditional bank. We analyzed the possible attractions and risks of ZOPA’s service to customers, from the perspective of social lending and social networking, using public data from ZOPA’s website. Our intention is to understand the nature of this reintermediation and explain the development of this process through Giddens’ propositions

Gender Differences in Equity Crowdfunding

Online peer-to-peer investment platforms are increasingly popular venues for entrepreneurs and investors to engage in financial transactions without the involvement of banks and loan managers. Despite their purported transparency and lack of bias, it is unclear whether social inequalities present in traditional capital markets transfer to these platforms as well, impeding their hoped revolutionary potential. In this paper we analyze nearly four years' worth of data from one of the leading UK-based equity crowdfunding platforms. Specifically, we investigate gender-related differences in patterns of entrepreneurship, investment, and success. In agreement with offline trends, men have more activity on the platform. Yet, women entrepreneurs benefit of higher success rates in fund-raising, a finding that mimics trends seen on some rewards-based crowdfunding platforms. Surprisingly, we also find that female investors tend to choose campaigns that have lower success rates. Our findings contribute to a better understanding of gender-related discrepancies in success on the online capital market and point to differences in activity that are key factors in the apparent patterns of gender inequality

Strength in adversity: community capital faces up to the economic crisis

The current economic environment has created new challenges, as well as opportunities, for the community development finance industry.Community development ; Financial crises

Understanding the Role of Commitments in Explaining P2P Lending Investing Willingness: Antecedents and Consequences

As a relatively new e-commerce phenomenon, peer-to-peer (P2P) lending has the potential to thoroughly change the structure of the loan segment in the financial industry. And the success of P2P lending heavily depend on users’ continuous use. However, this topic has not been fully studied in IS research. The high practical significance and lack of research indicate the importance of the present study. This study aims to apply Meyer and Allen’s three-component model of commitment to construct a research model, which incorporates context-specific antecedents. To test the model, we use a survey of 216 actual lenders of the P2P lending platform in China. Results derived from data indicated that lenders’ continuous investments were jointly determined by continuous commitment and affective commitment. Further, platform assurance, trust on third-party, economic feasibility and quality of alternatives performed well as antecedents of continuous commitment. And perceived critical mass and platform assurance were significantly associated with affective commitment. The results of this research provided theoretical implications for future research and practical implications for the success of P2P lending platforms

Online Fundraising Through the Lenses of Law, Economics, and Sociology: Examples from American P2P Lending and Thai Rotating Savings and Credit Association

In recent years, online lending has become a new method of financing that allows people to lend and borrow anywhere anytime. Yet, due to its complex and wide-ranging operation, the online lending phenomena has become one of the most buzzing regulatory concerns. Online lending not only challenges incumbent loan providers like commercial banks by providing loans to unserved borrowers at attractive rates, it also presents unprecedented investment opportunities for individual lenders who are often referred to as ‘peer’ or ‘crowd’ to lend out their money commercially. In this dissertation, I explore how two different online lending methods help individual lenders who often lack financial sophistication to make safe investment and how laws and regulations may affect online lending businesses and their consumers. This dissertation includes two essays that examine two examples of online lending practices: peer-to-peer (P2P) lending in the United States and online rotating savings and credit association (ROSCA) in Thailand. The first essay argues P2P lending platforms originally endorsed interpersonal relationships in lending and adopted many peer-to-peer features, such as social networks, personal profiles and group affiliations because interpersonal relationships are valuable and imperative for individual lenders and borrowers on P2P lending platforms. Nevertheless, the laws and regulations on P2P lending in the United States have caused P2P lending platforms to relinquish their commitments to utilize interpersonal relationships. The disappearance of interpersonal relationship on P2P lending platforms results in worse economic and sociological outcomes for individual lenders.The second essay argues that interpersonal relationship is paramount to the success of ROSCAs in Thailand. Traditionally, ROSCA participants rely on their interpersonal relationships to lend and borrow from each other. Recently, an online form of ROSCAs has emerged and spread. Online ROSCAs allow strangers, who have no interpersonal relationship to easily create a virtual ROSCA. Such a risk alarms the financial regulators, lawmakers, and the public. Nevertheless, the current regulatory landscape on ROSCAs have also been developed based on a long concern of frauds created by informal fundraising methods. While the current regulatory regime aims to ban and restrict ROSCAs which are operate beyond a local and personal level, the regulations effectively deem the whole category of online ROSCAs illegal and drove them to operate outside to the formal financial system. Both P2P lending in the United States and ROSCAs in Thailand utilize interpersonal relationships among parties of lending transaction to address four fundamental concerns in lending: uncertainty, information asymmetry, interpersonal trust, and institutional trust. From an economic perspective, Ronald Coase’s proposition suggests that personal relationships may help reduce uncertainty and information asymmetry in economic transactions including lending. From a sociological perspective, Francis Fukuyama and Linda Molm acknowledge the importance of interpersonal trust and institutional trust within financial exchanges. Interpersonal relationships among actors of a financial transaction can build and maintain interpersonal trust and institutional trust. This dissertation also applies both the economic and sociological perspectives to understand how laws and regulations might affect P2P lending platforms, and traditional and online ROSCAs. The studies of P2P lending platforms and online ROSCAs exemplify how the current laws and regulations which were developed based on more traditional financial methods can shift new financial services, particularly online lending, into a worse position

UNDERSTANDING PERCEIVED PLATFORM TRUST AND INSTITUTIONAL RISK IN PEER-TO-PEER LENDING PLATFORMS FROM COGNITION-BASED AND AFFECT-BASED PERSPECTIVES

In this study, we drew from the existing online trust model to develop a specific model of online lending platform trust from the perspectives of cognition-based trust and affect-based trust. Trust between lenders and borrowers have been discussed a lot but there are no empirical studies focusing on trust toward lending platforms. The dearth of the relevant studies on this aspect indicates the great need for the present study. This study aims to incorporate the Technology Acceptance Model with additionally context-specific factors to propose a research model. Perceived platform trust is divided into three dimensions: technology expectancy, cognition-based trust and affected-based trust. To test the model, we collected data from 300 users with different educational levels on p2p lending platforms in China. The structure of demographic features of our samples is analogous to that of the overall p2p market in China at the end of 2012. The finding suggested that positive reputation and social influence had few impacts on trust toward lending platforms and perceived institutional risks. The finding of this research provided a theoretical foundation for future academic studies as well as practical guidance for both borrowers and lenders lending on p2p platforms

The Sharing Economy and Collaborative Finance: the Case of P2p Lending in Vietnam

Peer-to-peer Online Lending (P2PO) has received increasing attention over the last years, not only because of its disruptive nature and its disintermediation of nearly all major banking functions, but also because of its rapid growth and expanding breadth of services. This model offers a new way of investing in addition to investing in traditional channels such as banking or financial company. The transaction process is done online, the personal information and terms of mobilization are completely transparent and secure in the best way. The strong development of P2PO also raises a number of issues that require careful attention to promote positive and to limit negative aspects. The research aims to highlight particular aspects of this new business model and to analyze the opportunities and risks for lenders and borrowers in Viet Nam. The research combines qualitative analysis and data survey to serve descriptive statistics about P2PO in Viet Nam. The research show the potential of online peer lending is enormous but the regulators will restrict the Sharing economy model in general and P2PO lending in particula

Framing the collaborative economy - Voices of contestation

Within the context of multiple crises and change, a range of practices discussed under the umbrella term of collaborative (or sharing) economy have been gaining considerable attention. Supporters build an idealistic vision of collaborative societies. Critics have been stripping the concept of its visionary potential, questioning its revolutionary nature. In the study, these debates are brought down to the local level in search for common perceptions among the co-creators of the concept in Vienna, Austria. Towards this aim a Q study is conducted, i.e. a mixed method enabling analyses of subjective perceptions on socially contested topics. Four framings are identified: Visionary Supporters, Market Optimists, Visionary Critics, and Skeptics, each bringing their values, visions, and practical goals characteristic of different understanding of the collaborative economy. The study questions the need for building a globally-applicable definition of the concept, calls for more context-sensitivity, exploratory studies, and city-level multi-stakeholder dialogues

Tap and Reposition Youth (TRY): Providing Social Support Savings and Microcredit Opportunities for Young Women in Areas with High HIV Prevalence

This document describes providing social support savings and microcredit opportunities for young women in areas with high HIV prevelence. Tap and Reposition Youth (TRY) was a multiphase microfinance initiative which aimed to reduce adolescents' vulnerabilities to adverse social and reproductive health outcomes, including HIV infection, by improving their livelihoods options. The project was launched in low-income and slum areas of Nairobi, Kenya, where rates of HIV infection are high and where young women are disproportionately affected. TRY targeted out-of-school adolescent girls and young women aged 16-22. Through continual review and modification, the TRY microfinance model evolved from a limited savings and credit model, to one that expanded upon social support, such as friendship and mentorship