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The Role of Trust in the Divergent Development of Alternative Lending Channels in the UK and Germany



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A large body of literature in the social sciences highlights the importance of trust as a necessary condition for economic exchange and the functioning of markets. By contrast, the relationship between trust and variation in financial market practices across national economies has received relatively little attention. This dissertation uses two alternative, non-bank lending channels in the period following the 2008 financial crisis as an empirical case study to analyse the influence of trust on the development of small business lending practices in the UK and Germany. A nested mixed methods design has been applied to the quantitative and qualitative analysis of unique, primary source loan transaction data, surveys of internet lending platforms, and surveys and semi-structured interviews with individual investors. Analysis of lending data finds different growth trajectories for each channel in each market, a pattern of development consistent with propositions of the Varieties of Capitalism (VoC) framework using its assumptions about the different institutional arrangements in liberal market economies (LMEs) and coordinated market economies (CMEs). Analysis of investor survey data and interviews provides a complimentary, trust-based explanation for these different development trajectories: there are unique social arrangements in the UK and Germany underlying their institutional arrangements and producing different forms of trust that investors rely on to assess the risk of lending in each channel. This dissertation argues that the VoC explanation for variation in the financing practices of firms across economies is incomplete because it fails to explain how societal arrangements and micro-foundations of trust influence the financing alternatives available to firms. This empirical study links comparative institutionalism and sociology of finance literatures by providing a more contextualised, holistic understanding of cross-national diversity of financial practices.





Lane, Christel


Trust, Comparative Institutionalism, Economic Sociology, Sociology of Finance, Peer to Peer Lending, Alternative Finance, 2008 Financial Crisis, Mittelstand, Varieties of Capitalism, SME Lending, Social Studies of Finance


Doctor of Philosophy (PhD)

Awarding Institution

University of Cambridge