Peer-to-peer lending platforms’ legitimacy in the eyes of the general public and lenders

The new millennium experienced a transformation in the economy, moving from conservative finance institutions to online platforms, such as the Peer-to-Peer [P2P] lending websites. While these platforms gained much interest, they compose a minor share of the private lending sector. Our main interest is to assess perceptions and public attitudes about the perceived risks of lending money through the internet and using P2P lending platform. We conducted a representative survey among 1,108 Israelis, among them 4% (47) who were or are active on P2P lending platforms. The results indicate that the public is ambivalent towards these platforms. On the one hand, respondents felt the platforms are suitable for modern life and offer a form of competition to the conservative banking system; on the other hand, they expressed concern about risks to privacy, risks relating to having loans paid back, and an overall lack of understanding regarding how the platforms work. We found differences between users based on their activity on the platform, gender, income and personality characteristics. In the discussion, we connect these results to the need of the platforms to gain cognitive and socio-political legitimacy.