The quest for a sustainable social finance business model: is peer-to-peer lending the legitimate heir to cooperative banking?

Abstract

In the aftermath of the global financial crisis, concern regarding the social purpose of finance has increased. The role played by peer-to-peer lending (P2PL) seems to resemble the role historically played by cooperative banks (CBs). In this study, we investigate whether P2PL platforms can stand as the legitimate heir of CBs as they appeared when established. A cross-comparison of P2PL and CBs business models (BMs) is conducted among multiple dimensions. The study claims the achievement of a social purpose is not necessarily linked to a specific BM. On one side, CBs are supposed to fulfil their stated social purpose through the supply of accessible and affordable financial services; however, they suffer the burden of growing regulatory pressure. On the other side, P2PL platforms do not explicitly pursue social purposes; however, they could eventually provide such a purpose, at least for specific customer segments.