How Can Peer-to-Peer Lending Help Finance Micro, Small, and Medium Enterprises in Indonesia During the COVID-19 Crisis?

Abstract

The objective of this research is to explore and understand the elements which makes peer to peer lending a valuable alternative financial service provider for micro, small, and medium enterprises or MSMEs in Indonesia during the COVID-19 pandemic. This topic is chosen as these businesses have a high significance in the Indonesian economy and are large in volume which provides opportunity for peer-to-peer lending platforms. This research uses the descriptive qualitative method as it is focused on accumulating knowledge by observing real phenomenon and using secondary data by previous research. The findings show that MSMEs have opted for peer-to-peer lending as their funding method both before and during the pandemic due to their high accessibility, simplicity, efficiency, and transparency. Moreover, the exponential growth of the peer-to-peer lending volumes during recent times are attributed to the business constraints which the pandemic has brought to MSMEs as well as the increase in use of information technology.

Keyword: MSME, COVID-19, Fintech, Peer-to-peer Lending, Finance, Indonesia