New regression coefficient to your adjustable out of loan usage (X

₅) of –0.998, indicates that the loans received by MSEs are statistically affected by the purpose of loan usage. MSEs with lending utilisation for consumptive purposes tend to obtain fintech loans that are smaller than expected. In online selection system, fintech operators recognize that such lending purposes are deemed to be riskier than that for productive purposes, such as for improvement in working capital. It means that fintech providers must have the ability to innovate technology (eg. Utilising artificial intelligence (AI) to identifiy such behaviour in order to minime the risk of loan default. car title loan Maryland According to Boshkov & Drakulevski (201eight), risk management makes financial institutions, especially fintech, to necessarily have a framework to manage various financial risks, including procedures to identifying, measuring and controlling risks with AI.

₆) is statistically significant. Regression coefficient of –2.315 indicates that the shorter payment period between annuities will be a consideration for lenders to provide loans for prospective MSEs. Payments on a daily or weekly basis will incur higher costs than on a monthly basis, especially if the debtor MSEs do not pay according to the agreement. This kind of debtor behavior will disrupt cash flow of fintech institutions.

Regarding the variable of completeness of credit requirement document (X₇), it is statistically significant. The regression coefficient of –0.77 indicates that the ownership of basic documents without a business license document, such as an ID card, still has the opportunity to get a fintech lending in accordance with their expectations. It means that the requirements for fintech lending documents tend to be easier and more flexible than the banks. The characteristic makes it easier for MSEs to access fintech loans as stated by Budisantoso et al. (2014) that the major characteristics of suitable credit for MSEs is the utilization of uncomplicated borrowing procedures.

Thus, fintech will evaluate 1 by 1 that have AI technology ahead of carrying aside borrowing realization so you’re able to decrease the risk borrowing from the bank that simply cannot be came back (Widyaningsih, 2018)

Furthermore, a reason for borrowing variable (X₈) is not statistically significant. However, positive coefficient indicates that the ease of fintech requirements to get a virtual lending has no effect on the amount of loan approved. It means that the convenience factor is not a determining factor for investors (lenders) to provide the lending. Fintech utilizes digital technology to identify potential debtors’ abilities, in addition to the collateral ownership factor. The characteristic of fintech is significantly different from banks which generally require collateral as a condition (Widyaningsih, 2018).

Annuity mortgage repayment program (X

Regression coefficient of compatibility of loan size to business needs (X₉) of 1.758 indicates that the amount of lendings proposed by MSEs as prospective debtors to fintech is approximately equivalent to their business needs. It is possible, because fintech as an operator has offered a lending value ceiling that is adjusted to the target debtor by considering the risk of credit failure. Likewise when the MSEs apply for credit through fintech, they consider their business needs and their ability to repay the loan.

The analysis has investigated this new determinants regarding MSEs from inside the obtaining money off fintech lending. It stops that probability of getting fintech money in keeping making use of their traditional are influenced by the size of social media, monetary properties and you can risk impression. The new social media basis related to MSEs internet sites need facts compliment of social network is one of the factors for loan providers in the taking lendings as required. To attenuate the possibility danger of investors (lenders), fintech credit workers and you can loan providers get advice out-of various online authentications, social networking and you will social support systems, in which this type of products be several and easily obtainable through the sites. A number of the guidance obtained from internet sites would be made use of just like the a resource in the process of assessing creditworthiness of these prospective debtors of the fintech lending.