Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between peer-to-peer lending and operational efficiency of banks has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of Lagos State where operating conditions differ markedly from more developed markets.

Lagos State presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

While peer-to-peer lending is widely discussed in policy and industry circles, empirical evidence on its actual effect on operational efficiency of banks within Lagos State remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to peer-to-peer lending are helping or hindering operational efficiency of banks — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Peer-to-Peer Lending on operational efficiency of banks in Lagos State.
2. To assess the extent to which peer-to-peer lending influences operational efficiency of banks within the study area.
3. To identify the challenges associated with peer-to-peer lending in relation to operational efficiency of banks.
4. To recommend strategies for optimizing peer-to-peer lending in order to improve operational efficiency of banks.

1.4 Research Questions

1. What is the effect of peer-to-peer lending on operational efficiency of banks in Lagos State?
2. To what extent does peer-to-peer lending influence operational efficiency of banks within the study area?
3. What challenges are associated with peer-to-peer lending in relation to operational efficiency of banks?
4. What strategies can be adopted to optimize peer-to-peer lending in order to improve operational efficiency of banks?

1.5 Significance of the Study

Beyond its academic contribution to the field of finance / banking, this study has practical value for management teams within Lagos State seeking to understand how peer-to-peer lending translates into measurable outcomes around operational efficiency of banks. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

In terms of scope, this study confines itself to Lagos State, focusing specifically on how peer-to-peer lending relates to operational efficiency of banks within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.