Microcredits and peer-to-peer lending as financing tools for start-ups in Germany

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction
• 1.1 Relevance of the Topic
• 1.2 Objectives and Structure of the Thesis
• 2 Fundamentals of Microcredits
• 2.1 Definition of Microcredits
• 2.2 Characteristics of Microcredits
• 2.2.1 Socio-Political Intentions
• 2.2.2 Credit Period and Redemption
• 2.2.3 Credit Risks and Collaterals
• 2.2.4 Developmental Types of the Supply of Microcredits
• 2.2.4.1 Upgrading
• 2.2.4.2 Downscaling
• 2.2.4.3 Greenfieldbanking
• 2.2.4.4 Linkage Banking
• 2.2.5 German History of Microcredits
• 3 Fundamentals of Peer-to-Peer Lending
• 3.1 Definition of Peer-to-Peer Lending
• 3.2 Characteristics of P2P Lending
• 3.3 Models of P2P Lending
• 3.3.1 Direct and Indirect Lending
• 3.3.2 Secured and Unsecured Lending
• 3.3.3 Prior Relationship Lending
• 3.4 Exemplary P2P Lending Process
• 4 Parallels of P2P Lending and Microcredits
• 5 Relevant Theories of Economics Concerning Microcredits and P2P Lending
• 5.1 Law of Diminishing Marginal Returns
• 5.2 Transaction Cost Theory
• 5.3 Principal Agent Theory
• 5.3.1 Problems of the Principal-Agent-Relationship
• 5.3.1.1 Adverse Selection
• 5.3.1.2 Hold-Up Problem
• 5.3.1.3 Moral Hazard
• 5.3.2 Approach for Problems of the Principal-Agent-Relationship
• 5.3.2.1 Screening
• 5.3.2.2 Signaling
• 5.3.2.3 Monitoring
• 5.3.3 Summary of Findings for the Principal Agent Theory
• 6 Framework for Microcredits and P2P Lending in Germany
• 6.1 Economic Factors and Labour Market
• 6.2 Current Start-Up Demeanour in Germany
• 6.2.1 Formations of Companies in Numbers and Structural Features
• 6.2.2 Characteristics of Start-Up Financing
• 6.3 Alternatives of Financing
• 6.4 Loan Programmes
• 6.4.1 Start-Up Grant of the Federal Employment Agency
• 6.4.2 Support for Recipients of Unemployment Benefit II – “Einstiegsgeld”
• 6.4.3 KfW Start-Up Loan
• 6.5 Legal Framework for Microcredits and P2P Lending Platforms
• 6.5.1 General Regulations for Microcredits
• 6.5.2 Legal Framework for P2P Lending
• 7 Supply of Microcredits and P2P in Germany
• 7.1 Microcredit Supply
• 7.1.1 The “Mikrokreditfonds Deutschland” and Microfinance Institutions
• 7.1.2 The “Deutsche Mikrofinanz Institut”
• 7.1.3 The GLS-Bank
• 7.1.4 Summary of Loan Disbursement
• 7.2 P2P Lending Suppliers
• 7.2.1 Smava
• 7.2.2 Auxmoney
• 7.2.3 Online P2P Microcredit Model
• 8 Demand of Microcredits and P2P Lending in Germany
• 8.1 Potential Volume of Demand
• 8.2 Borrower Characteristics
• 8.2.1 Start-Ups of Women
• 8.2.2 Start-Ups of Immigrants
• 8.2.3 Start-Ups out of Unemployment
• 8.3 Investors Characteristics
• 9 Evaluation of Start-Up Financing through Microcredits and P2P Lending Platforms
• 9.1 Impact Assessment of the “Mikrokreditfonds Deutschland”
• 9.1.1 Evaluation of the Preferential Treatment of Target Groups
• 9.1.2 Evaluation of the “Mikrokreditfonds Deutschland”
• 9.1.2.1 The Expedience of Founders
• 9.1.2.2 The Expedience of Microfinance Institutions
• 9.1.2.3 The Expedience of the DMI
• 9.1.2.4 The Expedience of the GLS Bank
• 9.1.2.5 The Expedience of the “Mikrokreditfonds Deutschland”
• 9.2 Evaluation of the P2P Granting System

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

The thesis aims to investigate the potential of microcredits and peer-to-peer lending platforms as startup financing tools in Germany. It explores the fundamentals of both models, their parallels, and relevant economic theories. The thesis also examines the German market context, including economic factors, the startup landscape, existing loan programs, and the legal framework. Finally, it evaluates the efficiency and sustainability of these financing models in supporting German startups.

• Fundamentals of Microcredits and Peer-to-Peer Lending
• Parallels and Differences between Microcredits and P2P Lending
• Economic Theories Applied to Microcredit and P2P Lending (Transaction Costs, Principal-Agent)
• The German Startup Financing Landscape
• Evaluation of Microcredit and P2P Lending Models in Germany

Zusammenfassung der Kapitel (Chapter Summaries)

1 Introduction: This chapter introduces the topic of alternative financing for startups in Germany, highlighting the challenges faced by small and micro-enterprises in accessing traditional bank loans, especially in the aftermath of the 2008 financial crisis. It introduces microcredits and peer-to-peer (P2P) lending as potential solutions and sets the stage for the thesis by outlining its objectives and structure.

2 Fundamentals of Microcredits: This chapter defines microcredits, distinguishing between global and German contexts. It details the characteristics of microcredits, including socio-political intentions, credit periods, risk assessment, and collateralization. It explores various developmental models for microcredit supply (upgrading, downscaling, greenfield banking, linkage banking) and traces the history of microcredit in Germany, highlighting the contributions of Schulze-Delitzsch and Raiffeisen.

3 Fundamentals of Peer-to-Peer Lending: This chapter defines and characterizes peer-to-peer (P2P) lending, emphasizing its online nature and disintermediation of traditional banks. It explores various P2P lending models (direct vs. indirect, secured vs. unsecured, prior relationship lending) and provides a detailed description of the P2P lending process, using Smava as an example, illustrating the platform's functionality, risk mitigation strategies, and investor protections.

4 Parallels of P2P Lending and Microcredits: This chapter draws parallels between microcredits and P2P lending, highlighting their similarities in loan amounts, credit periods, and target group overlap. It explores common challenges, such as information asymmetry, adverse selection, and moral hazard, and discusses relevant theoretical frameworks, including the experiences of Grameen Bank and Rotating Savings and Credit Associations (ROSCAs).

5 Relevant Theories of Economics Concerning Microcredits and P2P Lending: This chapter presents foundational economic theories relevant to understanding microcredits and P2P lending. It discusses the Law of Diminishing Marginal Returns, Transaction Cost Theory, and Principal-Agent Theory, analyzing how these theories explain market inefficiencies and the role of information asymmetry in credit markets.

6 Framework for Microcredits and P2P Lending in Germany: This chapter examines the German context for microcredits and P2P lending. It analyzes relevant economic factors and the labor market, the current startup environment, alternative financing options, and government loan programs. Finally, it delves into the legal framework governing both microcredits and P2P lending platforms in Germany.

7 Supply of Microcredits and P2P in Germany: This chapter explores the supply side of microcredits and P2P lending in Germany. It details the role of the “Mikrokreditfonds Deutschland,” microfinance institutions (MFIs), the “Deutsches Mikrofinanz Institut” (DMI), and the GLS Bank in the microcredit market. It also profiles the two major German P2P lending platforms, Smava and Auxmoney, and introduces the online P2P microcredit model.

8 Demand of Microcredits and P2P Lending in Germany: This chapter analyzes the demand for microcredits and P2P lending in Germany. It assesses the potential volume of demand, focusing on the characteristics of borrowers (women, immigrants, unemployed) and investors on P2P platforms. It examines the specific needs and challenges faced by each target group.

Schlüsselwörter (Keywords)

Microcredits, Peer-to-Peer Lending, Startup Financing, Germany, Information Asymmetry, Transaction Costs, Principal-Agent Theory, Mikrokreditfonds Deutschland, GLS Bank, Smava, Auxmoney, Social Inclusion, Economic Development, Risk Mitigation, Small and Medium-sized Enterprises (SMEs), Default Risk.

Frequently Asked Questions: A Comprehensive Language Preview of Microcredits and Peer-to-Peer Lending in Germany

What is the main topic of this document?

This document provides a comprehensive overview of microcredits and peer-to-peer (P2P) lending as alternative financing options for startups in Germany. It examines their fundamental characteristics, explores relevant economic theories, analyzes the German market context, and evaluates their effectiveness in supporting entrepreneurship.

What are the key themes explored in this document?

The key themes include the fundamentals of microcredits and P2P lending, a comparison of both models, relevant economic theories such as transaction cost theory and principal-agent theory, the German startup financing landscape, and a thorough evaluation of the success and sustainability of these financing models within the German startup ecosystem.

What are microcredits and how are they defined in this document?

Microcredits are defined as small loans provided to individuals or micro-enterprises, often with socio-political intentions to foster economic development and social inclusion. The document differentiates between global and German contexts and details characteristics like credit periods, risk assessment, and collateralization.

What is peer-to-peer (P2P) lending and how does it work?

Peer-to-peer lending is defined as an online platform that connects borrowers directly with individual lenders, bypassing traditional banks. The document explores different P2P models, such as direct vs. indirect lending, secured vs. unsecured lending, and describes the typical lending process.

What are the similarities and differences between microcredits and P2P lending?

Both microcredits and P2P lending offer smaller loan amounts and shorter credit periods, often targeting similar groups of borrowers. However, they differ in their origination and structure. Microcredits often have a stronger social mission, while P2P lending operates primarily within a market-based framework.

What economic theories are relevant to understanding microcredits and P2P lending?

The document discusses the Law of Diminishing Marginal Returns, Transaction Cost Theory, and Principal-Agent Theory. These theories help explain market inefficiencies, information asymmetry, and the challenges of risk assessment in both microcredit and P2P lending environments.

What is the German context for microcredits and P2P lending?

The document analyzes the German economic landscape, the startup environment, existing government loan programs, and the legal framework regulating microcredits and P2P lending platforms in Germany. It examines factors impacting both the supply and demand of these financing options.

Who are the key players in the German microcredit and P2P lending markets?

On the supply side, key players include the Mikrokreditfonds Deutschland, various microfinance institutions (MFIs), the Deutsches Mikrofinanz Institut (DMI), and the GLS Bank (for microcredits). For P2P lending, Smava and Auxmoney are highlighted as major platforms.

Who are the typical borrowers and investors in the German microcredit and P2P lending markets?

The document profiles typical borrowers, focusing on women-led startups, immigrant-owned businesses, and startups founded by unemployed individuals. It also explores the characteristics of investors participating in P2P lending platforms.

How are the effectiveness and sustainability of microcredits and P2P lending evaluated in the German context?

The document presents an evaluation of the Mikrokreditfonds Deutschland's impact, including assessments of its preferential treatment of target groups and the overall effectiveness of the program. It also evaluates the efficiency and sustainability of the P2P lending system in Germany.

What are the key words associated with this topic?

Key words include microcredits, peer-to-peer lending, startup financing, Germany, information asymmetry, transaction costs, principal-agent theory, Mikrokreditfonds Deutschland, GLS Bank, Smava, Auxmoney, social inclusion, economic development, risk mitigation, SMEs, and default risk.

What is the overall conclusion of this document?

The document aims to provide a comprehensive analysis of the potential of microcredits and P2P lending as tools for startup financing in Germany, considering both their benefits and limitations within the specific economic and legal context.