AN ASSESSMENT TO DETERMINE THE VIABILITY OF A PEER-TOPEER LENDING MODEL AIMED AT THE SOUTH AFRICAN MARKET

Abstract

Borrowing has become an integral part of the lives of many South Africans. Debt is not a topic discussed by many, as it is often associated with negative connotations; however, the fact that so many depend on it has become problematic. With increasingly high interest rates, and nowhere else to turn, borrowers accept their predicament, grossly indebting themselves. Investors, on the other hand, continuously search for investment opportunities. Unfortunately, interest rates at banking intermediaries in South Africa are not always a lucrative proposition; investors often have to search elsewhere. However, since the advent of peer-to-peer lending models,an opportunity for lenders and borrowers to amalgamate could possibly be introduced. The benefit to borrowers would be lower interest rates paid, and to investors, higher interest rates earned. This study focussed on a population of individuals whoreside in the Western Cape, of South Africa, either falling in the category of a prospective investor/lender, or a borrower. The characteristics of investing and borrowing were investigated, in order to establish whether a possible relationship between the two could exist by introducing a peer-to-peer lending environment in which the two parties can interact directly with one another.