Measures to Promote Access to Finance Through Peer-To-Peer Lending Regulations in Thailand: A Comparative Study of the United States of America, The United Kingdom, and China

Abstract

       Currently, the concept of encouraging and supporting small and medium-sized enterprises (SMEs) is emphasized by the public sector of many countries, including Thailand, as essential for economic growth and national development. SMEs, an important driving economic force of the economy, are impeded by access to finance.

       Considering current financing channels available to SMEs in Thailand through financial institutions acting as financial intermediaries (indirect financing), capital markets (direct financing), or non-bank, such as credit card business, personal loan under supervision or nano-finance business under supervision, may be insufficient to serve SME numbers. In 2022, the Bank of Thailand (BOT) reported that over 60% of SMEs were unable to obtain loans.

       To resolve this issue, some nations adopt loan-based crowdfunding or peer-to-peer (P2P) lending as financial technologies to develop channels for providing funds from diverse sources to potential users. They work through a website or application as intermediary, especially in the United States of America, the United Kingdom, and China. These countries have engaged in P2P lending in recent years with a unique P2P lending business model recognizing issues and obstacles and continuously improving pertinent regulations and laws.

       In Thailand, the BOT, by virtue of the Ministry of Finance’s Notification Re: Businesses Requiring Approval According to Clause 5 of the Revolutionary Council Decree No. 58 (Re: System or Electronic Network for Peer to Peer Lending), issued the BOT Notification No. Sor Nor Sor.14/2563 Re: Regulations, Procedures and Conditions for Operating a System or Electronic Network Business for Peer-to-Peer Lending (peer-to-peer lending platform) on July 31, 2020, still valid today.

       These findings suggest that problems and obstacles persist in P2P lending regulations and related laws in Thailand, including supervising P2P lending and related regulations, diversity of credit types, the P2P loan platform investment model, consumer protection, and applying artificial intelligence to P2P lending business compliance works.

       To resolve these issues, a comparative study was made on supervising and regulating P2P lending in the United States of America, the United Kingdom, and China. The goal was to formulate policy suggestions for revising and improving P2P lending regulations in Thailand; making it more widely accepted and popular would help people and enterprises, especially SMEs, to obtain more financing channels, reduce informal debt occurrence and effectively achieve P2P lending business supervision and consumer protection.