Free Essay

P2P Lending in Singapore

In: Business and Management

Submitted By AmnaMalik
Words 13527
Pages 55
Abstract
This study focuses on demand of P2P market among SMEs and consumer market. The researcher has developed a framework based on how peer to peer lending platforms are important for SME’s and what are the governmental regulations to promote online lending platforms, how SMEs play an important role in the development of economy, how important is the peer to peer platform to them and the future position of peer to peer market in Singapore. The focal point lies on the demand of peer to peer lending platforms among small and medium enterprises and consumer market. The study illustrates a high demand of peer to peer lending among small and medium enterprises regardless of less security of investment. This study also includes risk and regulations associated with peer to peer lending and the impact of social behaviours and social connections on the decision of investors related to investment in online platforms.

Acknowledgement
I owe a debt of gratitude for working adults and SMEs for providing me accurate data and their feedback regarding their loan preferences. I would like to thank all for their precious time and respond. As this work would not be possible without their time and effort.

Tables of Contents
1.0. Introduction 4
1.1. Peer to peer lending platform 5
1.2. Background of the research 7
1.3. Objectives 8
1.4. Research Rationale 9
2.0. Literature Review 9
3.0. Research Methodology 19
4.0. Data analysis 21
5.0. Results and Finding 22
6.0. Strengths and limitations 28
7.0. Conclusion 29
Bibliography 31
Appendix 34

Table of Figures
Figure 1 Non-performing Loan of Singapore 17
Figure 2 Framework 19
Figure 3: Working Adults' preference to peer-to-peer lending 20
Figure 4 SMEs' preference for peer-to-peer lending 21
Figure 5 Government support in Peer-to-peer lending 21

Role of peer to peer lending in the development of SMEs in Singapore
1.0. Introduction
Increasing popularity of peer to peer lending has caused a huge financial integration to countries such as United Kingdom, United States, and China etc. According to forbes.com, Peer to peer accounts up to 90% of capital deployed in financial industry. Presence of Peer to peer lending is now an alternate financing platform to investors and companies without going through traditional methods of approaching banks or financial institutions due to fact that they offer higher returns.

For Singapore, peer to peer lending is still considered as a new and developing sector. Singapore economy mainly consists of Small and Medium Sized Enterprises (SME), whereby most new start-up SMEs face problems in getting loan from bank or financial institutions due to lack of goodwill. This means, peer to peer lending in Singapore bridges the SMEs gap of getting loans for business development. This research mainly focuses on the future of Peer to peer lending in Singapore that is useful to have a practical insight of Peer to peer lending and its implications in Singapore.

Peer to peer lending took a huge lead in financial industry during last few years and their accelerating presence holds a deep impact on financial sectors. Peer to peer lending is growing rapidly in terms of its service and also in other financial areas to surpass normal banking services. With the known popularity of peer to peer lending, it has definitely bridged the gap in financial industry by allowing investors directly lend money via online platform to companies without any middle man that result in effective cost savings.

Therefore, the information, framework and methodology gathered through the selected paper will enhance our knowledge on social factors that contribute to risks, rewards and implications after introducing peer to peer lending in Singapore.

1.1. Peer to peer lending platform
Most peer to peer lending platform expands during the recovery period of the economic crisis 2008. Zopa.com is one of them. In 2005, it claimed to have one of the best loan performances among the entire peer to peer lending platform with post-crisis since 2010. Despites the growth, there were many peer to peer lending platform that experienced greater lose due to the economic downturn.

UK being the third largest national crowd funding economy after USA and China, its peer to peer lending platform has gathered and created their own self-regulating organization, the Peer-to-peer Finance Association (P2PFA). Members of this platform tend to help themselves to higher standards as compare to others lending platform. These peer to peer lending platforms are rewarded for setting up the organization by gaining a huge amount of public and governmental goodwill within UK.

Peer to peer lending platform setup a database for borrowers to find suitable investment match. The business model for every country varies; some investors are directly linked to borrowers while others, borrowers are required to create accounts, providing information, for the purpose of loan, loan amount, income and debts in order to link investors. Even between peer to peer lending platform , interest rate treatment can also be different, for example in Zopa.com, throughout the whole bidding process interest rate is flexible and the loan is funded starting with the lowest interest rates proposed. This makes the interest rate variable for every individual fund invested to that particular loan, whereby in Prosper.com the interest is pre-determined and remain constant throughout every single loan.

With a platform filled with potential borrower’s details and requests allows lenders look through and select suitable requests. Borrowers request for loan by creating and listing details such as loan amounts, interest rate, repayment percentage, and bid period ranging from 3 to 5 years for the completion of loan. A huge range of loans and market type is one of the advantage. Such as Prosper.com has introduced free market, where anyone is able to scan a loan listing, lenders is determined through a bidding system but some of the borrowers are able to successfully raise 100% of the requested sum to get loan.

Following are the major peer to peer lending platforms working in Singapore. These platforms, plays an important role in the development of SME and help them raise finance.
• Funding societies www.fundingsocieties.com
• Capital Match- http://www.capital-match.com
• Moolah Sense - https://moolahsense.com
• Crowdo - https://www.crowdo.com
• Fundacity -http://www.fundacity.com
• Entreexchange -http://www.entrexchange.com/en/w
• Kyepot (incubator stage, participants of StartupbootcampFintech SG) -http://www.kyepot.com
• New Union - https://www.newunion.sg
• Silver bullion https://www.silverbullion.com.sg
Moolah- Sense, Capital Match and Funding Societies have recorded the highest fund raisers for SMEs that is more than $10 million.

Besides these peer to peer lending platform there are many other home based lending platforms working in Singapore. These homegrown peer to peer lending includes Fundhere and New Union. These small sites face problem either on lender side or borrower side. Olive Green, the company that has established a success story in peer to peer lending platform. It provides eco-friendly packages on peer to peer lending with it more than 2,500 registered investors. . It has set an example of bright future outlook of peer to peer lending platforms.

Peer to peer lending operates online, resulting in lower overhead cost. Such social networks are able to solve problems such as lack of borrower's creditworthiness information. In the case of borrower defaults or delay in payments some platforms claim on behalf of investor. Such as RateSetter.com, it has provision funds that can be claimed on behalf of investors so that there should not be any delay in repayments. Not all peer to peer lending platforms have such provision; they are not obliged to bears any responsibility for borrower defaults.

Banks look at a long criteria before approving the borrower's loan, the ability of the borrower to repay loan, pledging of collaterals, ability to place down payment, meeting the conditions affecting the loan and lastly the character of the borrowers to a certain trustworthiness. Some of the factors that induce the borrowers to choose peer to peer lending over traditional banks are link directly to the interest rates and term of loan. Banks charges lower interest rates if borrowers able to repay the loan within a shorter loan term, which is opposite of what most borrower is look for. Collateral is also an issue for borrowers, their concern is the risk of losing their collateral if they are unable to pay. Without the need of collateral on peer to peer lending is one huge advantage over traditional banks for both investors and borrowers.

Introduction of peer to peer lending platform benefits borrowers in various ways. As Compared to traditional banks, online application of loan provides an ease of computer access anywhere, time and the amount of information for application is relatively lesser, approval of loan wait was also significant shorten. As the natural of the loan on peer to peer lending platform, funding of small loan under $5000 typically only take a few days to less than a week to be funded, giving quicker access to cash. Another benefit for borrowers are attractive interest rate that peer to peer lending platform able to provide, going as high as 7% Annual Percentage base on borrower payback timeline and credit history.

1.2. Background of the research
Jeopardy has become a global giant issue due to high volatility of market. This loss of investment is associated with different types of risks, most important of them is credit risk that deals with inability of borrower to repay the borrowed money. Many researchers have tried hard to create a model that can minimize this risk and have overcome the issue to some extent. Chances of loss of investment got increased by many folds when two parties do not know each other. Same is the case in peer-to-peer lending. That has created a cloud to connect lenders and bowers from different regions to gain investment.

Motivation behind this research is an increasing trend of social lending that has brought an ease to the process of getting investment. This research paper examines demand associated with social lending and the future of peer-to-peer lending in Singapore. There are many researchers like Katherine Ren, Traci L. Mach, Courtney M. Carter, and Cailin R. Slattery, Ian Galloway, Peter Baeck, Liam Collins and Bryan Zhang and many other, who have researched on this topic, its effects on economy, its trend and how helpful it is for the investors. Peer-to-peer lending is mainly fruitful for small and medium enterprises as they mainly face problems in getting investment due to no goodwill and relation in the market.

1.3. Objectives
Objectives of this research is to highlight the importance of peer to peer lending in the development of SMEs that in term flourishes economy as 99% of enterprises in Singapore are Small and medium size enterprises. . Peer to peer lending has brought forward a new financial platform that allows investors to lend and borrow money online without interference of any middle man. The researcher also discusses how peer to peer lending eliminates middle man that results in effective cost savings. This means that borrower can enjoy lower interest rates and lenders will yield a higher return. The cost savings benefits are embedded with financial risks such as credit risk. The term credit risk is actively discussed throughout the paper and is defined as the inabilities of borrower to repay its principle plus interest amount.

Further this research aim to address issues related to online lending platforms. Prospers.org also provides online forums, allowing users freely discuss their personal views, share their expertise, experience and interact with each other. Often or not, peer pressure plays extensive impact on individual’s decision making process as well (Turkle 2011).

With the growing trend of peer to peer lending, it causes disintermediation to banking functions. Financial regulations also affect growth of peer to peer lending, hedging and diversification of various risk factors. This is a crucial part and parcel of it shows how it influences individual preference in peer to peer lending marketplaces under different financial situations.

1.4. Research Rationale
Rationale behind this paper is to understand better that how social factors in peer to peer lending can impact an individual’s decision making and credit risk preference in different financial situations. This examines the gap of potential future implications after introduction of peer to peer lending in Singapore and it also reads ¸ how a decision making process can convert risk factors into reward structure.

Current Singapore’s regulations and legislation have little limitations on peer to peer lending because peer to peer lending in Singapore is still in growing stage. Singapore has always adapted a comprehensive ruling on its financial industry. Will the future peer to peer lending maintain, sustain and expand with the regulations implement by the government?

2.0. Literature Review
Peer to peer lending is a financing method online where unrelated individuals obtain loan from others without going through traditional banks and financing companies. Because the availability and quick access of internet everywhere makes it no longer a requirement for individuals in a group to live close another or to actually know each other. Borrowers can either take loans through social network, online platforms, investors sites, or even directly receive loan from lenders to household borrowers.

Peer to peer lending is an alternative whereby strangers can obtain loan from one and another without any intermediary such as banks and financial institution. Borrowers can get a loan from home just a few clicks away on the internet which makes it super easy compared to banks (Anon., 2015).

There is a large role of SMEs in the economic development of Singapore as 70% of the workforce in Singapore is associated with SMEs and these SME contribute 50% of Singapore’s income.1.52 billion citizens are involved in the operations of SMEs. In this way these SMEs play a role of backbone of Singapore’s economy (Singapore, 2015).
Peer to peer lending platforms are striving hard to generate a level of trust, confidence and acceptance in Singapore as these platforms are important for SMEs because 99% of Singapore’s enterprises are SMEs. This highlights the importance of peer to peer lending platforms that should be in portfolio (Sense, 2015). These platforms also provide opportunity to investors to generate higher return than that of traditional banks.
In 2013 it was estimated that 66% of the Singapore workforce is involved in the employment related to small and medium enterprises (Tan, 2015). Government has taken many considerable stamps to promote small and medium enterprises in the region. Government has spends $45 million in skills future mentor programs to promote and boost the development of small and medium enterprises. Investors are keen to make Singapore a prime country to invest in especially in small and medium enterprise sector of the country. In order to rationalize this, government has serious considerations.

According to an SME report in Singapore only 13% applications of loan request from SMEs were approved during 2012 in Singapore. SMEs choose to start their operations in Singapore due to robust regulation and legal framework (Hobey, 2015). Business environment and opportunities are developing in Singapore that has attracted many investors. To support these investors of Small and medium Enterprises Singapore’s online platform regulation committee is investing in the development of these platforms.

Less interference in the loaning process makes online lending an optimal choice for borrowers that promotes an anonymously connection between lender and borrower. These online platforms enable borrowers apply for loan through a structured process that is online application process (Lim, 2013). Crowd funding has the potential to disrupt consumer finance as it provides as disinter mediated finance has been continuously capturing market (Morse, 2015).

Social lending helps borrowers take loans at lower interest rate than that of market and provide lender an opportunity to invest at a higher rate of return than from banks and other alternatives. With the passage of time it has strengthen its roots and has gain its position at a major online business. There are many online websites that act as an intermediate between lenders and borrowers. Prosper. Com is the first online platform that provides these facilities. This site was launched in USA in 2005 and now has become second largest having 1.5 million members and $380 million of funded loans. Prosper. Com describes itself as an “eBay for loans” (Chena, et al., 2013). Prosper .com operates in more than one country. It fulfills needs of borrower specially small and medium enterprises. Through this channel borrowers specify their listing including the amount they need and a maximum rate of interest they are willing to accept.

The interest rate companies charge depends upon the risk involved in borrowing and lending (Anon., 2015). P2P Lending is a fruitful way and better choice than banks as it provides borrowers an access to reach a potential lender (Lim, 2013). These channels help borrowers, an individual or any financial institution; get to be used for different purposes. At any stage, if a borrower fails to return the loan, he may be delisted. In order to provide transparency to the system, all the information about borrower is verified. Lenders choose individual listing and then bid for a specific interest rate. Lenders also mention their desired interest rate and amount they want to lend. For this whole process prosper charges an equal proportion of fee (transaction fee) from borrower and service fee from lender.

Most of the lenders do not trust online plate forms for investment as there comes a high credit risk. The credit risk involves uncertainty of the repayments (Morris & Shin, 2010). Online platforms are not responsible for any fraud cases and they do not even guarantee the credit worthiness of borrower. That is the main reason many of the entities do not follow them to take loans.

Trust is created when individuals use their social connections and online platforms informally to facilitate themselves especially when they use connections as social collateral (Karlan, et al., 2009). Informal connections tend to increase power of relations. Despite rapid growth of peer to peer lending platforms the risk is still high because investment is usually made in the companies that do not have sufficient assets and are volatile in nature.

According to regulatory bodies there needs to consider these online platforms. There are some important regulations that may apply on these platforms under Security and Futures Act (Varma, 2016). Platforms working in Singapore like Capital Match and Moolah Sense have excellent growth rate. New evolving platforms are now considering to establish risk free framework by pegging its amount of loan by gold and silver reserves.

These is a significant impact of Social factors such as membership of a group on individual’s risk preferences. Being the member of a group that is risk taking or risk averse will respectively affect individual’s preference for investment (Sitkin & Amy, 1992). Group decisions are perceived to be less risky than that taken individually. Individual behavior is also affected by the group stereotyping.

Individuals having less information are reluctant to take any decision and rely on group members as they perceive their group members have more information than he and in this way an ambiguous social situation comes into being. Individual believes his group member has right information and accurate decision towards the situation (Aronson, et al., 2014).

Online community participation also effects a consumer’s risk taking abilities, but these platform do not pay attention to understand this effect that community participation leaves on an individual (Zhu, et al., 2010). Social Communities alter an individual’s behavior towards risk that is group influence.

There is a significant impact of social connections on trade and business decisions. Agents in auction learn through interaction and the information spread among bidders during auction (Chena, et al., 2013). Social network influence decisions but there is a problem in social groups that people try to be the part of a group that matches their priorities which is term does not bring any clear change. This highlights the fact that formation of groups is not random; self-selection is the part of group formation (Lazarsfeld & Robert, 1954).

Lenders personally know one another and share information among their peers. In any community such social behaviors re normal like consciousness of kind, shared rituals and 5 traditions, moral obligation manifested (Thomas & Thomas, 2001). Peer to peer market not only has structured a unique process in it but it also focuses on different aspect of human nature like social interaction , intra-group communication and engendering of social trust. These factors enable social groups perform in a productive way, through synergy of their efforts and efficiency.

Non-banking financial institutions are not allowed to charge higher interest rate than that of announced by authoritative bodies (Tsai, 2015). Research from (Lin & Viswanathan, 2009) suggests that borrowers in a group are more unlikely to defaults. That is the reason peer to peer lending involves high credit risk. Online platforms do not guarantee borrowers credit worthiness. Loss of investment prevails in lender’s mind leading towards reluctant to adapt online platforms that can be a giant reason of failure of such platforms.

(Ravina, 2012) has also highlighted that although figures are not high, African American are less likely to get their loans funded, paying higher interested rates and tend to get defaults more often than Caucasians. Borrower's employment status is one of the key information that investors actually look at. Social lending has penetrated in the market and increasing day by day. Total borrowed money in 2007 through peer to peer lending was approximately $650 million that is projected to grow in coming years (Chen & Ghosh, 2006).

According to researchers (Gao, et al., 2015) high commitment of lender is important to evaluate lender’s willingness to continue investing in social lending platform. Lender are the other side of the bridge if their commitments are not strong the platform will never be able to work effectively. No money available for loans will lead toward less trust of the borrowers due to unavailability of resources. Many borrowers have adapted this platform due to availability of multiple options to fulfill their needs. No availability of suitable resources will lead towards the failure of the platform.

Borrowed who tend to be more creditworthy have higher chances of fulfilling their needs for loan and those borrowers who are more trustworthy have better options to seek loans and their tendency of default is very less (Wang, et al., 2015). On borrower side trustworthiness is the main option that is to evaluate. Low trustworthiness leads to no fulfillment of loan and vice and versa. In order to rate the creditworthiness of a borrower his credit rate is an important factor to be considered (Altman & Anthony, 2001). Higher the credit rate, lower starting interest rate and vice versa. There are two other indicators as well that includes homeownership and web to income ratio that can be a good determinant to measure the credit worthiness of an individual.

On the lender side, lender can secure their investment by having much information about the borrower. This information may include borrowers past history, behavior and their careful selection on the basis of easy to cheese criteria. In this way lender can expect the profitability of his investment (Klafft, 2008).Behavior of the borrower can also be analyzed during auction.

Borrower’s financial strength and effort can be measured at the time of listing as that time determines the possibility of funding (Herzenstein, et al., 2008). At the time of listing needed fund borrower provides extra information as well that can be used as a tool to determine its strength. By the use of web 2.0 online platforms democratize the available information. As they emphasis on the availability of open information, dependency on social interactions and collaboration for mutual funds (Tapscott & Williams, 2007).

Lenders consider three things while bidding on a listing: being winner of the bid for ta specific listing, offered interest rate and increase the probability of being amongst winning lenders (Ceyhan, et al., 2011). These three factors play an important role in the success of auctions. Every lender wants to create a win-win solution for himself and for the bowler as well. Interest rate a lender charges depends upon the rules and regulations set by the authoritative bodies. No lender is allowed to charge the interest rate of his own choice yes variations may occur but bellow maximum limit.

(Ladd, 1982) Found that there is an impact of gender and their marital states on their credit worthiness. As banks are reluctant to fund unmarried applicants. Banks refuse mortgage applications of married men. Borrower’s race really plays an important role to determine his subjective creditworthiness (Megbolugbe, 1993). This shows race discrimination in mortgage and lending process. This not only affects the economy and social circle but also creates a sense of discourage among minorities.

As studied by (Black, et al., 1978) that states white couple tend to get loans more easily in better loan terms and conditions than black couples. Minorities pay more amount than that of black people pay (Courchane & David, 1997).

Researcher (Gonzalez & McAleer, 2011) also questioned the reliability of credit score on some of the peer to peer lending platform to act as an indicator of borrower’s creditworthiness considering that credit score is determined based on an individual's past financial behavior and records. As a results, individuals investors is having problem screening and predict the risks of losing their investment if borrowers defaults or the peer to peer lending platform site get closed down.

New Basel Accord regulations help Small and medium enterprises help financial sector recognize small and medium enterprises as they can be their major clients to seek loan. Lending institutions should rate adopt a rating system to specifically target small and medium enterprise portfolio (Altman, et al., 2008).

Peer to peer lending platform is able to compete with traditional banks by using the ease of internet access and the removal of the banking system, giving access to the large pool of borrowers and investors. Base on the article from (Freedman & Jin, 2008) on Prosper.com, it shows that platform like Prosper.com operates differently from traditional banks. The possibility of setting own interest rates and loans terms without going through traditional banks are beneficial to both the investors and borrowers. Examples such as Prosper.com and Lendingclub.com earns profit by charging 1% to 5% fee of the loan vary according to borrower's risk profile and loan duration.

After loan listing by the borrower lenders decide their decision of bidding for any specific loan. Lenders’ decisions rely on two variable interest rate they want to charge and amount of money they want to lend. After searching and having knowledge about borrowers personal and financial information lenders take their decision. On prosper. Com most of lenders’ decisions are conceptual and rely on microfinance model (Marguerite, 2001).

A notable rise in peer to peer lending came in 2007 but it still is a small part of overall lending services. But some researchers says peer to peer provides opportunity and technology but these are not the real lending platforms (Patwardhan, 2015). These platforms do not hold financial statements or do not involve credit risk that do not make them a pure lending entities. But with its ability to provide lower interest rate on loan and multiple number of investors and lenders on a single platforms, it has become popular. These platforms have not gained up to the mark government support and are still in very initial stage of their life cycle that is not even a growth stage due to lack of government support.

China and South Korea are the biggest market of peer to peer lending. According to international organization of security commission these two markets share captured the biggest part of market share in peer to peer lending. China has secured the loan of USD 940 million in 2012 and this amount is expected to increase in coming years with an rapid increase in this trend (Li, 2014).

Two largest peer to peer lending Prosper.com and Lendingclub.com, they allow investment as low as $25 to as high as $35000. It is mentioned by (Lim, 2013) lending club shows that at the end of the year 2008, they manage to fund $24 million in loan, where over more than half of which were credit card debt and debt consolidation. Even this figure is far from the amount of loan made by traditional banks, it states that huge proportion of the consumer's market prefers peer to peer lending over traditional banks.

Money lending in Singapore is supported by government regulatory authorities including Monetary Authority of Singapore, Ministry of Law and Money Lender Act. These regulatory bodies keep a check and balance on the system of lending. They prevent the intervention of unlicensed lenders and borrowers who lack credit history to save the whole online lending system from exploitation (Tegos, 2015). Capital Match ensures the security of trading through its platform as it has established relation with such government authorities. Moreover, the company says that any dab debtor of their platform can be chased because they have developed relationship with debt collecting companies. .Many researcher considers Singapore online lending industry as grey area. CEO of Capital Match claims that the in order to prevent fraud cases, online lending platforms have established a system that one can inform respected credit rating agency if any problem in repayment of the amount occurs from borrower side. This creates black credit history of particular borrower that can be used for future transections.

Talking about the security hazard of these online lending platform, researcher says these platforms are far much better and safer than banks as these platforms are bullion backed by 200% loan value in insured bullion (Kettell, 2016).

Peer to peer lending platforms are now getting viral on the basis of technology. Consumers can access these platforms on the distanced of one click. Creators of these lending platforms are now designing mobile apps to access these platforms. M-PESA is the first platform that allows payment, withdrawal, payment of public transport and for many other purposes through text messages. Companies can adapt it to distribute salaries (Chuen2 & Teo, 2015).

Research by (Freedman & Jin, 2008) shows that Prosper.com rewards incentives to group leaders when a group member loan gets funded. However, it was removed on 2007 as monitoring a loan on larger group is hard. Chances of misuse of the rewards system also increase as group leaders recruits borrowers with lesser screening due to the incentives.

Another benefit that surface from some peer to peer lending is the community’s forums, which in turn help to check on borrowers and its repayment; investors will then try to avoid high risks borrowers. (Heng, et al., 2015) Suggest that out of 45% loan requests with high credit grade borrowers, only 2.5% are from high risk borrowers.

Small and medium enterprises are the major source of a country’s income. In Singapore SMEs contribute more than half of their country’s GDP (Ata, et al., 2013). But unfortunately it is seen that financial institutions weak line for the development of SMEs. This is because of credit risk. Size of a Small and medium enterprise is the main hurdle in getting loan. Financial institutions consider SMEs a small enterprise that would not be able to return the loan amount. Beside this, lack of collateral and limited growth opportunities and capital, cash flow shortage due to long and delayed payment cycles are also the major obstacles that SMEs owners face when seeking finance for business.

Peer to business platforms are established to promote Small and Medium Enterprises. The mission of these platforms is to increase lending sources for SMEs. The purpose of these platforms is to empower individuals so they may take part in the development of economic growth (Yong, 2015).

Research shows that peer to peer lending is a viable alternative of financing. Peer to Peer lending is available to investors in certain states due to strict restrictions (Segal, 2015). Lenders cannot neglect the rules and regulations decided on bases of factual terms.

Government support of peer to peer lending is low in Singapore however government has made policies to promote SMEs and solve their lending problems. Deputy Prime Minister Harman Shanmugaratnam stated in his address in 2014 that economy should focus on the progress of SMEs in Singapore as SMEs covers a major part of country’s GDP and he communicated government’s top priorities for SMEs in coming phase to restructuring (Commitee, 2014).

The government of Singapore is committed to providing development opportunities to Small and Medium Enterprises by designing international, innovational and collaborative policies. Structure of these strategies focuses of Small and Medium Enterprises by adopting a holistic approach that the interest of local enterprises revolves around the betterment of Small and medium Enterprises.

CEO of a professional service company confessed that securing loan from commercial bank was not only difficult but also troublesome due to strict policies and legislations and personal priorities of these traditional banks (Min, 2013).

Evolution of lending clubs has helped many small players in the industry by providing them low-cost loan n to them who utilize them and increase the chances of high return through this loan cost borrowed money (Salmon, 2013). Once the lending clubs start their borrowing operations, the number of borrowers increased and that results in promising success chances. But the major hurdle in this model is that pool of borrowers is much larger than that of lenders. Due to unavailability of lending money these platforms fail. With an increase in the number of borrowers the number of risky borrowers also increases.

Silver bullion provides peer to peer loans to companies. This platform has competitive advantage by charging a lower amount of interest that is 405% per annum while other companies and online platforms charge 12%-25% per annum (Lim, 2015).

A World Bank non-performing loan of Singapore is lower than that of UK and USA this indicated a better position of the economy and credit worthiness of individuals. In 2014 non-performing loan of Singapore was 0.78 and it tends to decrease in coming years (Economics, 2014).

Figure 1 Non-performing Loan of Singapore
Source: Trade economics On Y-axis percentage amount of the non-performing loan is shown.

Despite governmental support, corporate lending efforts to promote innovation and technology among SMEs are slow (Sense, 2015). According to Loan Insurance Scheme (LIS) Government has decided to pay 50 % of insurance premium. This will secure the loans of SMEs by getting them insured against default (Liang, 2007).

The government of Singapore has focused on facilitating small and medium enterprises and consumer market by providing loans, grants, tax incentives equity financing and non-financing assistance that will help companies grow establish and grow their business locally and internationally. In 2011 with the help of government support more than 3000 SMEs upgraded their abilities that not only facilitated economy but also created a large number of employment opportunities (Centre, 2016).

Government is doing considerable efforts to promote SMEs. Government encourages banks ensure the availability of loans to SMEs. All the government owned banks make more loans available to small and medium enterprises. Government uses several peer to peer online platforms like Zopa, Market Invoice and funding circle (Flinders, 2015).

Government has designed strategies to facilitate business line including working adults from mass consumer market, starts ups and Small and Medium Enterprise through government schemes. These schemes include Innovation & Capability Voucher (ICV), Increase SME Productivity with Infocomm Adoption &Transformation, ICT for Productivity & Growth (IPG), Productivity and Innovation Credit (PIC)

PIC Bonus, Wage Credit Scheme (WCS), SME Enhanced Training Support, WordPro, Market Readiness Assistance Grant (MRA), Micro Loan Program (MLP). These schemes charge very little amount just as a services charges (Industry, 2013).
3.0. Research Methodology
The research is exploratory in nature as the research questions were aimed to understand the circumstances of peer to peer lending and underlying risks factors as well. Unit of analysis of the research is Singapore’s economy where researcher has analyzed the impact of peer to peer lending on Singapore’s Finance. To obtain primary data researcher has used Questionnaire as data collection tool. Closed ended dichotomous questionnaires are designed to prevent any ambiguity in results. Respondents for the questionnaire are working adults and Small and Medium Enterprises that are really concerned about small loans. From this defined population of Small and medium Enterprises Sample 54 SMEs and 143 working adults from mass market has been extracted to have a clear view of the trend adapting random sampling technique. Researcher has used secondary research including journal article and book related to topic and primary data is collected through questionnaire. Researcher has arranged appointment and used referrals to get access to maximum number of respondents.

For future context, this methodology has proven its worth and it can be replicated to calculate future credit risk preference or even other risks preference.

Framework
SMEs play a significant role in development of countries by creating most new employment opportunities. Since the introduction of peer to peer lending platform, rumors about replacement of traditional banks has become a common question. Introduction of the secondary lending market has somehow impacted banking& financing industries where peer to peer has been introduced. With the availability of peer to peer lending platform, business grew and generated profit during the economic downturns in 2008. As proved by the literature as well that social connections have a significant influence on individual’s decision (social influences). These influences alter individual decision and their preferences. These preferences includes their investment decisions and in case of this paper investment decisions of lenders deals with investing in online platform other than that, high demand of online platforms from SMEs has notable number of investors. SMEs prefer onl8ne bowering that is easily accessible. More developed and authorized online platforms encourage high demand from SMEs and individual consumer. Developed SMEs in term flourishes the economy as Singapore’s economy is comprises over 99% of SMEs that throws light on major role of SMEs in Singapore’s economic development. (Refer to figure 3).

Figure 2 Framework
4.0. Data analysis
Researcher has collected data from 54 Small & Medium enterprises and 143 working adults through questionnaire. Closed ended Questionnaire includes approximately 30 questions covering all the possible dimensions required for this research. Having collected, data has been analyzed on the basis of content validation that purifies the research and ensures that collected data is clear and sufficient to draw any conclusion. Data has been analyzed on the basis of percentages of positive and negative results. All the questions include different dimension that depicts a new side of the picture. (Refer to questionnaires in Appendix).
5.0. Results and Finding
On the basis of data collected from small and medium enterprises and working adults following results have been derived. 79.7% of all Small and medium Enterprises accept the reality that peer-to-peer market is a better and reasonable market that provides quick access to information and variety of loan options. Most of the Small and medium enterprises finance themselves from these online platforms. These online platforms help Small and medium enterprises rise their funds and run their operations as they play an important role in the development of the country. Those small and medium enterprises that are reluctant to approach online platform and peer to peer lending to take loan are afraid of risk involved in online platforms. These small and medium enterprise claim high rate of return and weak rules and regulations from the authoritative bodies of these platforms. This jeopardy of SMEs can be mitigate through implementation of rules and regulation to secure investments and implication of government support that would provide authentication to the platform.
Some major reason that SMEs fail to get loan from banks in Singapore are as following
• The amount of loan these SMEs require is very small due to which banks are reluctant to provide loans to them. banks do not lend less than $100K because the amount require to manage these accounts is equal to that6 is required to manage small amounts so banks lend high and earn more money by charging higher amount of interest for longer period.
• Banks do to earn enough incentives on smaller loans
• Banks take 2-3 weeks to reach any discussion regarding issuance of loan that is a long time for the borrower to wait.
• Most of SMEs fail to fulfill documentation requirements and unable to meet internal policies.
Besides SMEs, reviews of working adults have also been collected through questionnaires to examine their preferences towards peer to peer lending platforms. 84% of working adults prefer online platform to get funds for their operations. This shows thigh popularity if these online platforms among SMEs and working adults. Due to lack of authentications for these platforms 16% of the working adults are reluctant to adapt these platforms to seek loans. These reluctances are due to a fear of un-stabilization of the platform that may result in fluctuations of interest rate.
In the eye of working adults and SME’s the government regulations and support to promote online platform are not satisfactory. Majority of the SMEs finance themselves through these online platforms and negligence in the development of these platform may result serious harms. In order to promote SMEs and investment in the country government should focus on these platforms as these are the basic source to finance and get loans. These platforms are considered far much better than traditional banking regulations for seeking loans. Following are the results produced from data collected: Figure 3: Working adults' preference to peer-to-peer lending Figure 4 SMEs' preference for peer-to-peer lending

Figure 5 Government support in Peer-to-peer lending
Singapore’s government has announced some rule regarding loans provision these rule are announced by the Ministry of Law. This will help lenders calculate their loan interest on principle amount. This new release includes the following rules

• Administrative fee should not be more than 10 % of the principle amount
• Interest rate should be not more than 4% (per month) of the principle amount
• Late payment fee should not more than S $60
• Total borrowing cost should not be more than 100%

These rules were designed on 30th September 2015. These principals are applicable on loans that would be granted after the date of declaration of rules. These caps will not be applicable to business who have spent their registered time period of 2 years. The aim of these Cap regulation s is to protect borrowers who have no other choice to get loan but from registered and licensed lenders (Hui, 2015).
An individual having monthly earnings less than S $20,000 is allowed to take a loan of S $3,000. This provides lenders assurance their loan return.

On the other hand banking regulations include strict policies. Singapore’s banking regulations are the reflection of English laws. There has been made many revisions in banking regulation to help and provide general public best and secure lending and borrowing process. Personal relation with banker at the time of seeking loan are considered as a contract between borrower and the respective banker. Banks receive money from general public as save deposit. These deposits can be collected in relationship basis this endorses banker to use this money for the development purpose of the bank. Bank is subject to repay the borrowed amount at pre-decided time.

According to Singapore banking rules and regulation, a person with the age of 18 can enter into a contract. This age limit had been drooped by the Ministry of Law as a result of changes in Civil Law Act (Ooi & Wong, 2015).

During January 2015 women between ages of 40-54 had the highest loan facilities that includes mortgage loan, overdraft, motor vehicle loan, credit card balance and many other borrowings. The total amount of credit was $238,355 (Thng, 2015). Women under the age group of 40-50 are tend to take more loan than adults of that lie between the age group of 20-30.Tendency of taking loan and holding credit among women is higher than that of men in Singapore.

Majority of Singapore investors are buried under debt. Investment rate is high but it fails to create money. The main reason of loss of investment is a high debt percentage in the region. 1 of 3 investors owes debt in Singapore. 46% of Singapore’s investors are in debt. But Singapore is considered a better place to live in in term of tax deductions.

Lenders prefer companies to bank in order to lend high amount of money. As banks provide them low interest rate and they can earn a higher interest by lending the same amount to companies directly. Most of these lenders lend their money to small and medium enterprises. Peer to peer lending provides opportunity to lend money directly companies.

There is an increasing trend that banks are shifting their business towards per to peer lending and considering to have operations similar to the model of peer to peer lending. This does not indicates that banking sector is more risking but shows an increasing trend of peer to peer lending.

Most of the SMEs claim that they are unable to get loan from bank due to many reasons one of them is their short credit history. On the other hand many SMEs accept the reality that despite glowing growth and popularity of peer to peer lending platforms, this industry involves a lot risk that not only harm lenders but also borrowers.

SMEs in Singapore firmly believe their high contribution towards economic development and demands to increase supportive measurement for them that may help them establish and develop. As their development will be beneficial for the economy of Singapore as well. Findings unveil a hidden fact that many peer to peer lending platforms collaborate with escrow agencies to see money for lending as they lack direct access to lender’s money. These agencies facilitate online platforms to establish a transparent flow of funds and information to help lender and borrower as well. All the lending platform have their most prior mission to become the best lending platform with high trustworthiness. These platforms are striving hard to become the member of Fintech and Innovation Group (FITG).

According to Co-founder of Funding societies, he believes government will play a significant and active role in the development of peer to peer lending platforms. As these platforms facilitate SMEs in solving their pain pint and flourish in a better way. He further adds that government cannot neglect the importance of SMEs in Singapore economy. As these SMEs are the backbone of their economy. He believes government will put efforts to develop a risk free framework for these platform which will not only help the economy but the pillars, lender and borrower, of the platforms as well by setting up rules and regulations and investment security measures.

Online platforms are working to fill the gap of seeking investment in current global financial conditions as they provide better choices with low cost of administration, screening, capital and service. Peer to peer lending platforms has strengthen its role in mature economies like China, UK and USA where government sees a very supportive role of these platform in flourishing small and medium enterprises. These economies admit the better working of online platforms in providing comparatively low interest rates to borrowers and attractive and promising return to investors Moreover Chines government has declared to support these platforms at official level. Singapore economy has bright chances to take these platform at peek through its clear glance of high demand of loan by Small and medium enterprises, stable economy and high well established investor base. Impact of Social connections
Being in a group, borrowers are able to secure loan better than an individuals. Group leaders can set conditions for joining group such as providing additional information, such as personal information on their identity income or employment verification is common for joining some group. This way group leaders act as additional screening of borrowers for investors, although loans and investment between group members rarely occurs. Each borrower are only allow to join a group at a time, if borrowers wishes to leave group they are required to pay off all current loans before leaving.

In the case of less information about the borrowers' quality, investors may use borrower's gender as a screening guideline, as they thinks that gender is related to the chance of defaults. With two borrowers of similar characteristics, chance of selecting a female borrower is higher than choosing male borrower, due to the perspective that probability of female borrower defaults is relatively lower as compare to that of a male borrower. Gender discrimination also can be seen within lenders where they may have preference against borrowers of a particular gender due to prejudice. And these lenders may also request additional condition even that those borrowers may not be more risky than others borrowers. Although the results show that gender only have a small percentage the effects probability of default as compare to other characteristics of borrowers. It can be seen that investors fund loan to either male or female borrowers as long as the offered interested rate is high, and the borrower’s credit score is high or low.

Research data shows borrowers who are sole proprietors and retirees, offers the highest interest rate compare to that of a borrower who is self-employed. As investors come from different aspect of employment, they tend to shows some favor over certain employment of the borrowers. Many investors and borrowers have shown their interest I peer to peer lending due to its quick access and fast operation. There is an increasing number of repeating buyers and sellers of tis platform who are re-investing and resending their loan applications.\

Many small and medium companies were able to take advantage of these platforms after 2008 9 financial crisis when banks made strict regulations on provision of loan. Peer to peer lending provided them quick and faster access to their request solution without the involvement of any third party.

Importance of peer to peer lending for SMEs
Before the Introduction of peer to peer lending platform, Banks were the only source of lending credit to SMEs. Peer to peer lending platforms boomed after financial crisis of 2008, where a lot of SMEs failed securing loans from traditional banks. Most of SMEs were small scaled and had publically traded equity. Banks were reluctant to provide loans to SMEs because they tend to be more risky due to the fact that they were small scaled, had poor goodwill, highfailure risk and high exposure to the downturn of economy.

After financial crisis (2008), traditional banks and financial institutions had a drop in asset value, resulting in threshold loans. As SMEs were the most affected one during financial crisis, without the availability of peer to peer lending market, a lot of SMEs faced problem recovering effects of financial crisis. The effects of financial crisis was more obvious, with falling sales, weaken assurance and increased risk preventing investors and banks providing loans to borrowers. Strict screenings and banking regulations further reduced the numbers of SMEs, needed loans.

Financial crisis (2008) led to failure of many community banks, ideal banking places for SMEs to get loans, this created room for peer to peer lending in consumers’ market. The use of internet also allows investors gain access to more information about borrowers to examine risk and borrower's credits. With this, investors are able to better judge on risk assessment and the type of loans they wished to invest to generate high profit.

The constant growth in peer to peer lending platform has introduced a number of benefits and its profitability shows a positive survivability in near future. Although peer to peer lending platform has to proof its ability to fully replace traditional banks yet it still have room for improvement. The survivability of peer to peer lending depends upon the number of borrowers and investors available at same time on the platform. Over supply of funds can cause hedging of listing, which may result in adaption of traditional banking.

Many small and medium enterprises have established their borrower profile on peer to peer lending that help them secure loan easily. Companies who do not have any profile face difficulty due to their unstable revenue and no personal relation in the market. Such companies fulfill their loan requirements by securing short term loans.

Future of peer to peer lending
In 2015 these has been an increasing trend in crowd funding from small and medium enterprises. Singapore has developed crowd funding on the basis of two models 1. Community 2. Financial return. Community based crowd funding includes rewards and donations. It does not involve issuance of security or the prospect of financial returns. In Singapore there are many online platforms that are working on donation-based crowd funding and are easily assessable for the public.

Regulators who are involved with banking regulations may surpass peer to peer lending platforms as they play an important role in economic stabilization and consumer protection along with economic growth. Despite this fact, many regulating banks are looking forward to establishing such platform by creating opportunities for start-ups that in term may benefit them. As these platforms support small and medium enterprises that is important for economic growth. Consideration of banks to join lending through peer to peer lending platform has also risen. Regulations have been slow when it comes to forming of new online finance, which in return promotes growth for new companies.

Traditional banks still lack interest in direct competition with peer to peer lending platforms shows traditional bank views that peer to peer lending has the ability to challenge its core businesses in the finance market. On the other hand, growing peer to peer lending platforms have initiated Initial Public Offering (IPO); Lendingclub.com $5.4 billion IPO on the New York Stock Exchange mapped the potential of peer to peer lending platform. With a growth in industry, institutional funds have brought it to a better financial platform, gradually bringing peer to peer lending loans to a more complex asset types which requires more convenient exit options.

Singapore’s Government puts serious consideration for the promotion of Singapore Crowd funding as it facilitates many small and medium enterprises. Strict banking regulations of financing loans to SMEs affected bank’s lending and they continue promoting peer to peer lending at rate of 10% per year. As peer to peer lending market continued to grow, it possessed a challenge when more strict regulations were introduced. Although many of the market leaders claim that implementation of uniform regulations actually help in their business, it still remains a fact that there is danger of losing win- win situation to individuals with poor credit history..

In Singapore these platforms target small and medium enterprises. With a launch of silver bullion platform that is based on peer to peer lending model but a bit secure than those platforms. Silver Bullion has pegged its investment with large amount of silver and gold as a reserve. Since its launch, it has provided loan of S $250,000 in total as a result of loan application received of worth S $3 million (Tan, 2015). This platform is growing at a high speed and has entered a partnership with Monetary Authority of Singapore. Silver bullion provides secure loan with policy of high reserves.

Further development in this sector are expected to come with the serious consideration of Monitory Authority of Singapore. It has recently established Financial Technology and Innovation group to ensure the implementation of these policies.

Despite the fact, loans provided by these platforms are unsecure, many retail investors earn from the provision of small loans. P2P platforms claims that many SMEs turn to them due to ease of access, no requirement of collateral and firm’s weak credit ratings.

Taking about the establishment of peer to peer lending in Singapore one can say that 8 leading peer to peer lending platforms that are currently working are well established and are keen to promote themselves at best level.

Risk and Regulatory

High numbers of investors and borrowers have decreased the efficiency of peer-peer lending platforms. This has increased the amount of information to screen and approve loan requests that is time consuming. This is a big issue for borrowers with time sensitive loans.

Research has shown that the trend of paying off the loan is declining that may case recession to this industry but all the provided loans are not at a risk to default.

Although, peer to peer lending platforms have high operational flexibility as they have no obligation to check outdated data or fraud data provided by borrowers that has increased risk that investors faced at the time of taking investment decision.
Peer to peer lending is non-compliance to the country’s regulations, resulting in high risk of lawsuits, financial reform, and civil and criminal liability.

Increased popularity of peer to peer lending platform has increased defaults cases. In United Kingdom, Financial Conduct Authority has started regulating peer to peer market from April 2014, requires lending platform to keep clients’ money separate in a third party account.

Having maximum and minimum investment caps help inexperienced investors diversify their investments. At the time of failure, investors face difficulty in recovering their investment because platform is not responsible for debt collection, transfer and custodian services.

As peer to peer lending platform is unable to confirm non-financial information of borrowers on it platform sites, it is hard for investors to know if the borrowers is being rejected by banks due to bad credit or reason of loans is something against what the investors wanted to fund (Peer-pressure, 2015).
6.0. Strengths and limitations
The researcher has highlighted possible limitations of this study that deals with fact that lenders have higher credit risk during on-financial crisis period and lenders have lower credit risk during financial crisis period. It lacks supportive records and historical data, historical data might not be indicative of the future data. Moreover key factors such as disintermediation of banking functions, impact of financial regulation, hedging and diversification of various risks factors is not discussed.

Some Factors to support the framework and methodology’s accuracy and reliability are not discussed that shows over dependency on data collected. The methodology, arguments, attributes and calculation techniques are heavily dependent on the one single source, questionnaire and its analysis, this should not be the case as it does not validates the method of sampling and also it places too much emphasis on one single source of information.

Thus, the research can be revised by including different variables that may provide better insight and highlight other factors affecting the whole process and growth. Despite the high popularity of peer to peer lending platforms, financial experts do not consider them in a direct competition with banking sector.
7.0. Conclusion
The researcher has built up a theoretical framework from Social influence, demand of P2P, SMEs and their impact on economy to illustrate the demand for peer to peer lending and how important these are for any economy. Framework also illustrates the importance of Small and medium enterprises and how they get fund and their contribution to run economy. The research outline higher risk preference during non-financial crisis period, whereas lower risk preference during financial crisis period proven by the use of regression model.

It draws out framework. Hence, the paper contributes to an in-depth understanding the individuals’ credit risk preference in financial market.

All these findings are proven useful in addressing social factors that contribute to risks and rewards after the introduction of peer to peer lending and its future implications. The research also reflects how framework findings, credit rating preference, and prior behavior of working adults and small and medium enterprises towards online platform to seek loan, can better manage risk management and how it can affect individual in their decision making in accordance to their risk profile under the influence of social factors including their social groups.

It comes to a conclusion that a number of SMEs turning to alternate lending platform have no significant sign of regression in near future, taking a larger portion of consumer market has adapted way other traditional financing methods. Peer to peer lending has also caught the attention of policy makers in various countries and policy makers keep a closer eye on both the level and terms of lending. As they have come up with more newer and stricter regulations to enforce peer to peer lending process to reduce risk of defaults and fraud cases. It has also surfaced from the literature that peer to peer lending market has not been fully explored and have room for improvement. Even after comparing the pros and cons, introducing peer to peer lending into country such as Singapore with over 79% make up of SMEs shows that there are significant advantages over disadvantages to its financial platform. Remaining percentage of SMEs that are reluctant to approach online platforms indicates cells to be improved that can bring a surprising increase in numbers of consumers of online platforms.

Peer to per lending is the best option for SMEs as they get loan easily and directly from lenders. Small and medium enterprises confessed that getting loan from online plate forms is far easier than that from traditional banks. Online lending platform provide multiple options, accessible and no strict policies of loan.

Government support is not up to the mark to promote peer to peer lending platforms. SMEs lending trend has been decreasing since last 3 years due to less support of government but in coming years the graph is expected to grow high as government has turned its focus and considering the growth of SMEs lending through peer to peer lending platforms. Moreover peer to peer lending platforms are striving hard to collaborate with authoritative agencies that may provide them security and make them trustworthy. With a high financing demands from small and medium enterprises, well established investor base and stable economy, peer to peer lending is expected to flourish at high growth in Singapore.

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Appendix
Questionnaire # 1
A study on: Peer to peer lending in Singapore
Dear Professionals
You are invited to take this survey conducted among working adults in Singapore as a part of my Dissertation studies for Master of Science in Finance. All information gathered will only be used for the undertaken study and I will guarantee on confidentiality of information. Total time taken to complete these questions would be less than 15 minutes.

No. Questions Positive Negative
1 Age
 18-25
 26-35
 36-45
 Others
2 Gender
 Male
 Female
3 Race
 Chinese
 Malay
 Indian
 Others
4 Job Function
 Business/Accounting/Banking/Finance
 Human Resource/ Admin
 Engineering
 Information Technology
 Design
 Sciences/Laboratory/ R&D
 Others
5 Income Range
 0-2000
 2001-4000
 4001 and above
6 Are you
 Employed
 Self- Employed
7 Are you working for
 Small and medium-sized enterprises
 Multinational corporation
 Others
8 Have you heard of Peer to peer lending? Yes No
9 Where do you heard Peer to peer lending from
 Internet
 Newspapers
 Television
 Others
10 Your company took loan from
 Banks
 Peer to peer lending online platform
 Financial institutions
 Others
11 If you start a business, will you take loan from
 Bank
 Peer to peer lending online platform
 Financial institution
 Others
12 Do you have difficultly obtained a loan from bank? Yes No
13 What is the difficulty faced when obtaining a loan from bank?
 Amount
 Tenure
 Too much paper work and documents needed
 Long approval
 Others
14 Have you seek a loan from Peer to peer lending platform before? Yes No
15 What is stopping you from borrowing from Peer to peer lending online platform
 Credit Default Risk
 Length of platform establishment
 Goodwill
 Reputation of Founders and Investor
 Lack of Government Regulation
 Others
16 Do you think that Peer to peer lending platform is established in Singapore? Yes No
17 Do you think that Peer to peer lending website is professional and easy to navigate? Yes No
18 Do you think that applying loan on Peer to peer lending website is fast and hassle free? Yes No
19 Do you think that Peer to peer lending screening is more lenient in comparison to banks? Yes No
20 Do you think that Peer to peer lending is easier to get loan in comparison to banks? Yes No
21 Do you think that Peer to peer lending is cheaper financing option in comparison to banks? Yes No
22 Do you think that Peer to peer lending is high in risk in comparison to banks? Yes No
23 Do you think that Peer to peer lending is secure, reliable and trustworthy in comparison to banks? Yes No
24 Do you think that Peer to peer lending offer better financing options in comparison to banks? Yes No
25 Do you think that Peer to peer lending is beneficial to the financial economy of Singapore? Yes No
26 Will you choose a loan with lower rates in return of slightly higher risk? Yes No
27 Will future Peer to peer lending possessed an impact on the bank loan business? Yes No
28 Will future Peer to peer lending sustain and expand in Singapore? Yes No
29 In your opinion, what will bridge to successful peer to peer lending
 Historical good track records
 Reputation of Founders and Investor
 Good marketing strategy
 Secured Website
 Attractive Interest Rates with low risk
 Government initiatives to promote platform
 Others
30 Do you think Singapore government intervention play a very important role in the sustainability of peer to peer lending? Yes No
31 In general, are you satisfied with Peer to peer lending? Yes No
32 Will you recommend Peer to peer lending to your family and friends? Yes No

Questionnaire # 2
A study on: Peer to peer lending in Singapore
Dear Professionals
You are invited to take this survey conducted among Small and Medium Enterprises as a part of my Dissertation studies for Master of Science in Finance. All information gathered will only be used for the undertaken study and I will guarantee on confidentiality of information. Total time taken to complete these questions would be less than 15 minutes.

No. Questions Positive Negative
1 What is your Company name?
Your Answer:________________
2 Age
 18-25
 26-35
 36-45
 Others
3 Gender
 Male
 Female
4 Race
 Chinese
 Malay
 Indian
 Others
5 Job Function
 Business/Accounting/Banking/Finance
 Human Resource/ Admin
 Engineering
 Information Technology
 Design
 Sciences/Laboratory/ R&D
 Others
6 Income Range
 0-2000
 2001-4000
 4001 and above
7 Have you heard of Peer to peer lending? Yes No
8 Where do you heard Peer to peer lending from
 Internet
 Newspapers
 Television
 Others
9 Your company took loan from
 Banks
 Peer to peer lending online platform
 Financial institutions
 Others
10 Do you have difficultly obtained a loan from bank? Yes No
11 What is the difficulty faced when obtaining a loan from bank?
 Amount
 Tenure
 Too much paper work and documents needed
 Long approval
 Others
12 Have you seek a loan from Peer to peer lending platform before? Yes No
13 What is stopping you from borrowing from Peer to peer lending online platform
 Credit Default Risk
 Length of platform establishment
 Goodwill
 Reputation of Founders and Investor
 Lack of Government Regulation
 Others
14 Do you think that Peer to peer lending platform is established in Singapore? Yes No
15 Do you think that Peer to peer lending website is professional and easy to navigate? Yes No
16 Do you think that applying loan on Peer to peer lending website is fast and hassle free? Yes No
17 Do you think that Peer to peer lending screening is more lenient in comparison to banks? Yes No
18 Do you think that Peer to peer lending is easier to get loan in comparison to banks? Yes No
19 Do you think that Peer to peer lending is cheaper financing option in comparison to banks? Yes No
20 Do you think that Peer to peer lending is high in risk in comparison to banks? Yes No
21 Do you think that Peer to peer lending is secure, reliable and trustworthy in comparison to banks? Yes No
22 Do you think that Peer to peer lending offer better financing options in comparison to banks? Yes No
23 Do you think that Peer to peer lending is beneficial to the financial economy of Singapore? Yes No
24 Will you choose a loan with lower rates in return of slightly higher risk? Yes No
25 Will future Peer to peer lending possessed an impact on the bank loan business? Yes No
26 Will future Peer to peer lending sustain and expand in Singapore? Yes No
27 In your opinion, what will bridge to successful peer to peer lending
 Historical good track records
 Reputation of Founders and Investor
 Good marketing strategy
 Secured Website
 Attractive Interest Rates with low risk
 Government initiatives to promote platform
 Others
28 Do you think Singapore government intervention play a very important role in the sustainability of peer to peer lending? Yes No
29 In general, are you satisfied with Peer to peer lending? Yes No
30 Will you recommend Peer to peer lending to your family and friends? Yes No

List of SMEs invited to attempt the questionnaire
1. Kelter International Pte Ltd
2. High Notes Music Solutions
3. G Spa Pte Ltd
4. Pretious Solution Pte Ltd
5. Beautebrow.Com
6. The Dermatology Practice
7. LivingShack
8. Yeo Build Management
9. Tupperware
10. Tokyo Components (S) Pte Ltd
11. Teka Singapore
12. Sunlight Furniture Co
13. Strangelets
14. Straaten International
15. South Valley Enterprise Ltd
16. PastryDen
17. Big O Café & Restaurant
18. Zion Riverside Cafe
19. Ark Global Management Services
20. Cornerstone Alliance Llp
21. Mtm Skincare Pte Ltd
22. Enston Corporate Services Pte. Ltd.
23. Wu Wai Hong & Co
24. Tkc Associates Pte Ltd
25. Parex Group Pte Ltd
26. Menon Network
27. WDS Global
28. Cera Lifestyle Pte Ltd
29. Enrich Management Consulting Llp
30. Gac Group
31. Consulting
32. Wyndra Studio Pte Ltd
33. Altum Global Pte Ltd
34. Udders
35. Outlook Express
36. Mr The Tarik
37. Itdea (It-Solutions) Pte Ltd
38. Vangard Pte Ltd
39. Global Merchant Funding
40. Toolbox Design Pte Ltd
41. Samiksha Consultancy Services Pte Ltd
42. Create and Concept Pte Ltd
43. Salted Caramel
44. H2Hub Pte Ltd
45. Bee Cheng Hiang
46. Zircom Networks Pte Ltd
47. Z-Nix Trading Pte Ltd
48. Yk Technology Services
49. WinsysPte Ltd
50. Wf Technologies Pte Ltd
51. X'it Services Pte Ltd
52. Wall Street Electronics Pte Ltd
53. Totsworld Pte Ltd
54. Yen's Studio Pte Ltd
55. Yapi Pte Ltd
56. Crocodile international Pte Ltd
57. Wykidd Bespoke
58. White Weddings
59. Modo Investment Pte Ltd
60. Akimi Technology
61. Grep Tech Pte Ltd
62. Eazeetec Technologies
63. CebitsPte Ltd
64. Cornus Technologies
65. Alpha Web
66. Kooolweb
67. MancaliciousPte Ltd
68. Maxicom Global
69. Mod Venture Ptd Ltd
70. Optimal Health Network
71. Ubi Dental Clinic
72. Slappycakes.com.sg
73. SymmatrixPte Ltd
74. SG Comp-Tech Pte Ltd
75. Angel Sky8
76. Pretty 360 Salon
77. At Beauty Wellness Pte Ltd
78. Old Hong Kong Kitchen Singapore
79. Tung Lok Seafood
80. Seoul Good Korean Resturant
81. Mitraa InnPte Ltd
82. Tailor Me Online
83. Spectrum Hair Inn
84. Makan Bagus
85. www.mainzent.com
86. Ki.id concept and creator Pte ltd
87. USG Asia Pte Ltd
88. VNT Holiday Pte Ltd
89. Transerve
90. Prudence Consultancy Group
91. Janesce Skin Solutions
92. Smilearts Pte LTd
93. Care Lyna
94. Roff Pte Ltd
95. My Bag Empire
96. ASP Innovative Pte Ltd
97. MiniSQ
98. Financial Alliance Pte Ltd
99. Hong Nan Motor Agency
100. Money IQ Singapore
101. Financial Alliance Pte Ltd
102. Orion Corporate Solutions Pte Ltd
103. DMG Partner Securities Pte Ltd
104. Shooklin&Bok
105. DTZ(sea) Pte Ltd
106. Minghan Electornice(s) Pte Ltd
107. Syed Alwi Ng &co
108. Nikko AM
109. STM&P
110. DP Architects Pte Ltd
111. SME Funding Advisory Pte Ltd
112. Springlife Development Pte Ltd
113. Blue Reef
114. Rikecool Automotive Film Pte Ltd
115. CKS Property Consultants Pte Ltd
116. Home Loan Whiz
117. Pachealthholdings
118. Miracles Realty Group
119. Vision Law Llc
120. Kkkl Travel & tours

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