Factors Affecting Lending Behaviour and the Adoption of P2P Lending in Malaysia

P2P lending platforms offer individual investors with new investment opportunities to earn medium to high returns, typically ranging from 10% to 18%. However, such returns come with higher risk because many borrowers on these platforms in Malaysia are small and medium enterprises (SMEs) with low credit ratings and high failure rates, making it challenging for them to obtain loans from traditional banks. Consequently, investors on P2P lending platforms face potential default risks from borrowers, which can lead to a complete loss of their investment. The potential risks of P2P lending may deter some individuals from investing, which in turn could limit the growth of these platforms. To address this issue, this study aims to explore the factors that affect individual lending behaviour and the adoption of P2P lending platforms. The findings are crucial for platform providers and regulators to develop strategic policies that promote the sustainable growth of P2P lending industry in Malaysia.