The interest rate variability within the P2P lending market

Peer-to-peer (P2P) lending is an innovative alternative to traditional banking, it connects borrowers directly with individual lenders through online platforms. This research investigates the determinants of interest rate variability in the P2P lending market, by focusing on borrower background, loan term, and loan purpose. By using a regression analysis on data from the Dutch P2P platform Geldvoorelkaar, the research finds that loan term significantly affects interest rates, with longer-term loans associated with lower interest rates. On the other hand, borrower background and loan purpose do not show statistically significant impacts on interest rates, which is quite surprising. These findings provide insights for both borrowers and lenders to optimize their financial decisions in the P2P lending market.