Link to the University of Pittsburgh
Link to the University Library SystemContact us link
AEI Banner

The Business Models and Economics of Peer-to-Peer lending. ECRI Research Report No 17, May 2016

Milne, Alistair and Parboteeah, Paul (2016) The Business Models and Economics of Peer-to-Peer lending. ECRI Research Report No 17, May 2016. UNSPECIFIED.

[img] PDF - Published Version
Download (2256Kb)

    Abstract

    This paper reviews peer-to-peer (P2P) lending, its development in the UK and other countries, and assesses the business and economic policy issues surrounding this new form of intermediation. P2P platform technology allows direct matching of borrowers’ and lenders’ diversification over a large number of borrowers without the loans having to be held on an intermediary balance sheet. P2P lending has developed rapidly in both the US and the UK, but it still represents a small fraction, less than 1%, of the stock of bank lending. In the UK – but not elsewhere – it is an important source of loans for smaller companies. We argue that P2P lending is fundamentally complementary to, and not competitive with, conventional banking. We therefore expect banks to adapt to the emergence of P2P lending, either by cooperating closely with third-party P2P lending platforms or offering their own proprietary platforms. We also argue that the full development of the sector requires much further work addressing the risks and business and regulatory issues in P2P lending, including risk communication, orderly resolution of platform failure, control of liquidity risks and minimisation of fraud, security and operational risks. This will depend on developing reliable business processes, the promotion to the full extent possible of transparency and standardisation and appropriate regulation that serves the needs of customers.

    Export/Citation:EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL
    Social Networking:
    Item Type: Other
    Uncontrolled Keywords: Marketplace lending, financial regulation, credit risk, credit markets, liquidity risk, standardisation, digital economy, banking competition, credit availability, small business lending, consumer credit.
    Subjects for non-EU documents: Countries > U.K.
    EU policies and themes > Policies & related activities > economic and financial affairs > banks/financial markets
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > ECRI Research Reports
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 07 Jun 2016 09:19
    Number of Pages: 36
    Last Modified: 29 Nov 2016 09:40
    URI: http://aei.pitt.edu/id/eprint/76108

    Actions (login required)

    View Item

    Document Downloads