Online or Offline?: The Rise of “Peer-to-Peer” Lending in Microfinance

Online or Offline?: The Rise of “Peer-to-Peer” Lending in Microfinance

Susan Johnson, Arvind Ashta, Djamchid Assadi
Copyright: © 2010 |Pages: 12
DOI: 10.4018/jeco.2010070103
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Abstract

Over the past five years, “peer-to-peer” lending websites have become a new approach to mobilizing funds for on-lending to impoverished people in developing countries (microfinance) and domestic markets. In this paper, the authors review these developments and use the analytical lens of asymmetric information and transactions costs to explain the characteristics of the different models in operation. The authors find that “peer-to-peer” lending is more of an aspiration than a reality. Although web 2.0 technologies have offered new means of mobilizing funds, the borrowing mechanisms at work follow mainstream conventional approaches to the management of lending.
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Background

This section aims to scrutinize the impacts of Web 2.0 tools on transaction costs. Theories and applications will be discussed.

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