PEER-TO-PEER LENDING TYPE OF LOANS, CEO CHARACTERISTICS, AND NON-PERFORMING LOANS: CASE IN INDONESIA

• Main Author: Eka Putri, Yolli
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/62798
• Institution: Institut Teknologi Bandung

Peer-to-peer (P2P) lending is an alternative solution for small-medium enterprises (SME) and personal underserved by Bank. The loan accumulation of registered Indonesia P2P lending reached over IDR 194 trillion in April 2021 (OJK, 2021). As the loan accumulation increased, the NPL of platforms also increased. This research elaborates the platform’s factor that relates to the NPL of the P2P lending platform. The dataset comes from 61 OJK registered platforms registered in OJK in the research period (May 2019 – April 2021). As already explored before by another researcher, loan amount and pandemic condition is used as control variables in this research. This research use panel data analysis to minimize the bias of the result. P2P lending can offer a few types of loans on a platform. This research classified types of loan that is offered in the platform based on loan purpose into two types: consumptive loans (cash loan, employee loan, and product/service loan), and productive loans (SME loan, supply chain loan, project loan, invoice loan, and online seller loan). This research showed that consumptive loans, significantly employee loans, positively relate to NPL. Conversely, productive loans (significantly online seller loans, SME loans, and supply chain loans) relate negatively to NPL. This research also explores that the CEO’s age is consistently related to the platform’s NPL. Having a license is not significantly related to NPL in Indonesia’s P2P lending. The platform that offers the productive loan is needed to develop by stakeholders to increase SME access to the capital. The platform that offers the consumptive loan has to increase the credit scoring capacity and manage the loan features. Profile of CEO determines the platform’s performance, especially the age of CEO. The platform that has older CEO relates negatively to NPL. The abroad education experience of the CEO is used as an instrumental variable to age to handle the endogeneity problem. The more years a CEO has abroad education experience, the more effect of CEO’s age to platform’s NPL. The determination effect between loan portfolios offered in the platform is significant to be acknowledged by the P2P lending stakeholders. The regulator also ii needs to maintain the industry to fill the gap of capital access, but at the same time not become a digital loan shark, like a payday loan, and ruin the image of the industry itself. This research will benefit the regulator as considerations when creating a regulation that develops the P2P lending industry for the future. The findings also benefit the platform owner to decision making and strategy planning. For the future researcher, this research will give an insight into the condition of Indonesia’s P2P lending industry during the research period and find a direction what have to find out to develop this industry more sustainable in the future.