MEASURING PEER-TO-PEER LENDING'S EFFICACY IN POVERTY ALLEVIATION

Mengukur Efektivitas Pinjaman Peer-to-Peer dalam Pengentasan Kemiskinan

Abstrak

High poverty rates and persistent financial exclusion for Micro, Small, and Medium Enterprises (MSMEs) and the unbanked in Indonesia have necessitated the growth of Peer-to-Peer (P2P) Lending as a financing alternative. However, the existing literature often assumes a direct positive causality between fintech and welfare without adequately scrutinizing the potential downside risks, such as borrower over-indebtedness. This study addresses this gap by empirically examining the comparative elasticity of productive P2P financing versus conventional bank credit for MSMEs on poverty alleviation, while also analyzing regional heterogeneity. Employing Fixed Effects panel data regression on 34 provinces over the 2020-2024 period, the results demonstrate that productive P2P financing has a negative and significant causal impact on poverty levels. In contrast, conventional MSME bank credit shows no significant effect, highlighting the structural rigidities of traditional banking in reaching the unbanked. Regional analysis confirms P2P's consistent positive impact in both Western (β=−0.96) and Eastern (β=−1.04) Indonesia, suggesting it effectively bridges spatial digital divides. The study concludes that while P2P lending is a potent instrument for poverty reduction, its sustainability depends on regulators balancing ecosystem expansion with rigorous consumer protection measures to mitigate the risks of predatory lending and over-indebtedness.