ANALYSIS OF MORAL HAZARD IN ISLAMIC PEER-TO-PEER LENDING FINTECH IN INDONESIA

Abstract

Moral hazard is a risk that occurs when one party has more information than the other. Moral hazard is closely related to fraudulent behavior that benefits one party and harms the other. Sharia P2P lending fintech is highly susceptible to moral hazard in its operations. The present study aims to identify the sources and forms of moral hazard and to examine how mitigation efforts can minimize it. This qualitative study uses a literature review approach and the SLR (systematic literature review) method to analyze secondary data from available journals and books. The study's results reveal three sources of moral hazard: information asymmetry, weak corporate governance (GCG) by the platform operator, and weak supervision and regulation by stakeholders. Moral hazard is divided into three categories: borrower, platform operator, and lender. The forms include speculative behavior, unplanned investment, lack of transparency, excessive growth orientation, fraud, weak credit scoring, misuse of funds, non-compliance with agreements, conflict of interest, weak payment supervision, and incompetence of the DPS. Mitigation efforts include increasing education and literacy, improving transparency, strengthening the corporate governance (GCG) of platform operators, and strengthening stakeholder supervision and regulation. Mitigation efforts must be carried out to ensure the sustainability of Sharia P2P lending Fintech.