Does Social Lending Incorporate Social Technologies? The Use of Web 2.0 Technologies in Online P2P Lending
This paper examines whether web 2.0 techniques have led to a reduction in interest costs or an increase of credit availability by lowering transaction costs and overcoming information asymmetries. It studies the use of web 2.0 technologies in six peer-to-peer (P2P) lending sites.
P2P lending and web 2.0 are based on mutual and social exchanges between people instead of centrally controlled communications and relationships. Study findings reveal that:
- P2P lending consists of diverse websites of microcredit, social investing, small commercial loans, and lending between friends and family members ;
- Most P2P lenders are intermediaries between lenders and borrowers, and there is little direct contact between peers;
- None of the sites use all the web 2.0 tools, resulting in little impact on transaction costs.
The paper states that use of web 2.0 technologies might take time to find acceptance. It could be that web 2.0 tools merely increase users' enjoyment of the platforms and services. It is also possible that web 2.0 is only part of the story, and other marketing and product mix factors drive the success or failure of online lending.
