An investigation of changes in returns on peer-to-peer lending in Lithuania and Sweden during the COVID-19 pandemic: Evidence from wavelet coherence analysis

Abstract

FinTech has revolutionised financial services, making them more accessible and efficient. However, the COVID-19 pandemic impacted the FinTech industry, including peer-to-peer lending, in Lithuania and Sweden. This article explores the relationship between the pandemic and changes in peer-to-peer lending returns in both countries. By analysing existing literature, statistical data, and using wavelet coherence analysis, the study aims to understand the influence of COVID-19 on lending in Lithuania and Sweden. The results indicate that the pandemic had a limited impact on Lithuanian peer-to-peer lending, with average interest rates declining over time. Negative correlations between infection cases and lending returns were observed in specific quarters but were only significant in the short term. In contrast, the influence on Swedish peer-to-peer lending was more pronounced. Interest rates initially decreased, but a significant increase occurred in the first quarter of 2022, coinciding with a surge in COVID-19 infections and foreign policies. The negative correlation between cases of infection and lending returns persisted across the short, medium, and long terms alike in Sweden. These findings suggest that the Swedish peer-to-peer lending market was more affected by the economic and policy factors related to the pandemic than that of Lithuania.