Multi-Criteria Decision Analysis (MCDA) Approach to Support Lending-based Crowdfunding Market

Lending-based crowdfunding has emerged as a significant alternative financing model that helps fill credit gaps. However, evaluating borrowers’ creditworthiness and the platforms’ environmental, social, and governance (ESG) profile remains a challenging issue. This chapter examines the primary methodologies employed to evaluate these elements and explains the application of Multi-Criteria Decision Analysis (MCDA) as a valuable approach for addressing these challenges. According to the evidence presented in this chapter, the MCDA approach can enhance the decision-making process in the lending-based crowdfunding market. Additionally, the MCDA model provides a structured approach to evaluating complex, multidimensional criteria, enabling investors to weigh ESG factors when assessing potential lending opportunities.