Accelerated Growth of Peer-to-Peer Lending and Its Impact on the Consumer Credit Market: Evidence from Lithuania

Abstract

The paper analyses development and drivers of accelerated growth of peer-to-peer (P2P) lending in Lithuania and its impact on the consumer credit market with a focus on related sustainability issues. Legislative discrepancies between the P2P and banking segments are analysed and their role in predetermining the different development trends within the segments is highlighted. The research is composed of several steps, where each step analyses a certain problem with the aim to compare the processes in both segments, and is using two different approaches based on macroeconomic data and legislative environment analysis. The applied setup of the research allows for distinguishing and quantitative evaluation of the impact on the segments caused by various internal and external factors, such as macroeconomics, technological advantages of P2P platforms, and discrepancies within business regulation. The obtained results could fill in the scientific literature gaps by providing quantitative evidence of the influence the analysed internal and external drivers have on the growth rate of the consumer credit market segments in Lithuania and how this could affect the performance of the whole market, including its sustainability. Conclusions made could be of interest to researchers and practitioners in other countries too, especially those which have similar legislation and regulations within the consumer credit market. Methods used: a scientific literature analysis and generalisation, comparative analysis, statistical data analysis, correlation–regression analysis, mathematical modelling.

Do We Need P2p Between Bank Third Party Funds and Bank Credit?

“…P2P is one of the credits using FinTech, which provides services to bring lenders together with parties who need funds online (Petrushenko et al, 2018;Ramlall, 2018). The P2P financial market helps investors and borrowers invest or obtain lending without a banking intermediary function (Taujanskaite & Milcius, 2022). The relationship between P2P lending and banking is still interesting because the research results are inconclusive.…”

The Synergistic Power of Fintech and Digital Transformation

“…The P2P lending market has grown significantly in recent years, with more than 300 websites functioning globally [8]. P2P platforms are growing steadily, with the industry expanding at a 17% annual rate [10]. The growth rate is anticipated to continue doing so in the future.…”

“…Firstly, since they do not need a middleman, they are not subject to the stringent rules that third parties impose. Secondly, knowledge of the legal environment and regulations in the P2P and traditional banking segments is quite scarce [10]. So, the problems like scams will occur during the development of P2P lending.…”