REGULATORY CONDITIONS FOR PEER-TO-PEER LENDING FOR SMALL AND MEDIUM BUSINESSES

Purpose: This research analyses the importance of the collective financing model known as Peer-to-Peer Lending for Business (PPL-B) for small and medium-sized companies (SMEs). In particular it evaluates the impact of the national regulatory framework and the use of alternative credit risk assessment models applied by PPL-B on the credit access for SMEs. Design/Methodology: This research is based on a multiple case-study and the analysis of secondary information resources including 11 academics articles and 7 international research reports on the topic. The research scope is limited to a 5-year period (2013-2018) and looks at four referential countries in this sector including the United States, United Kingdom, China and Germany. Findings: PPL-B has become an important alternative source of financing for SMEs in the USA, UK and China. It furthermore suggests that the country-specific regulatory framework applied to PPL-B has an important impact on its growth and access to it for SMEs in these countries. Also, that the use of alternative data sources as applied by PPL-B platforms has a positive effect on the credit approval rates in the USA and China. Research/practical implications: The paper has direct implications for policymakers who can learn that SMEs can benefit from PPL-B if governments set up regulatory frameworks catered specifically for this sector. The paper informs investors and SMEs that the use of alternative data sources contributes to higher credit approval rates for SMEs. This research has several limitations due to the lack of data on the PPL-B sector and its impact on SMEs. To address these challenges, future research is to focus on in-depth country-specific studies that compare SMEs' credit access through traditional banking institutions and PPL-B platforms. Originality/value: This research responds to current lack of multiple-country studies that analyse the key factors to effective credit access for SMEs through PPL-B.