Evaluation of loans risks in peer to peer platform

Abstract

Peer to peer lending is often identified as one of the most significant developments in financial technologies (Fintech). Online peer to peer lending (P2P) is a new form of lending that is rapidly gaining popularity around the world. Although the activity of peer to peer lending platforms in Lithuania is relatively new, but the need of this service can be noticed – based on 2016–2020 data the number of lenders has increased 3.8 times. The purpose of this study is to determine whether the Finbee’s peer to peer platform credit raiting system is effective and to identify the riskiest and least risky borrower characteristics. Two methods were used in this study – statistical data analysis and logistic regression analysis. Based on the loan data for 2015–2021, the study found that the credit rating system of Finbee’s P2P platform is efficient. The characteristics of the riskiest and least risky borrowers were also determined. The results of the study may give investors more confidence in the platform’s credit rating system.