THE DETERMINANTS OF POTENTIAL FAILURE OF ISLAMIC PEER-TO-PEER ‘LENDING’

Abstract

The purpose of this study is to determine the influence of rate of return, financing purpose, size of financing, indebtedness, financing history, Islamic ethics, sharia contract, corporate governance, Ponzi scheme, and risk management toward the potential failure of peer-to-peer lending. This research is a quantitative study with a sample of 115 respondents filled the questionnaires. The sampling method is purposive sampling and the respondents of the questionnaires are practitioners, academicians, and Sharia Supervisory Board. The result of this study indicates that rate of return, financing purpose, size of financing, indebtedness, financing history, Ponzi scheme, and risk management has positive and significant effect on the potential failure of peer-to-peer lending in Yogyakarta. Meanwhile, Islamic ethics, sharia contract, and corporate governance has no negative or significant effect toward the potential failure of peer-to-peer lending.