Data Source_P2P Lending Platforms in Malaysia: What Do We Know?

With the recent evolution of Fintech, 11 peers to peer (P2P) lending platforms have been regulated by the Securities Commission in Malaysia since 2016. P2P lending platforms offer new investment opportunities to individual investors to earn higher rates of return than what traditional lenders normally offer. However, individual investors may face higher potential risks of default from their borrowers. Therefore, to make an effective investment decision, it is essential for individual investors to understand the potential exposure to such P2P lending platforms. This study aims to explore potential exposures that individual investors may experience at the licensed P2P lending platforms in Malaysia. Using manually collected data set available at 9 P2P lending platforms over a five-month period, relationships between interest rates and various risk classifying factors such as credit rating, industry, business stage, loan purpose and loan duration, are examined. Findings show that loans with a similar credit rating; and/or loan purpose; and/or a business stage may offer investors significantly different interest rates. In addition, loans with shorter durations may offer investors higher interest rates as compared to those with longer durations. Finally, loans issued by companies from the same industry appeared to be charged with similar interest. These findings are believed to be valuable to investors to prepare themselves before making their investments at the P2P lending platforms. With a first-hand collected data, this study provides a very first and original insight of the current P2P lending platforms in Malaysia.