The business models and economics of peer-to-peer lending
By Alistair Milne, Paul Parboteeah. 2016
153 citations recorded by the source corpus.
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.
Subfields: Economics and Econometrics, Finance, Management Information Systems
View Paper: https://www.semanticscholar.org/paper/f2ee3fc16e212579a3901a646c5fc69195257fa9
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In Economics and Econometrics
In Finance
- Anjan V. Thakor
- Thorsten Beck
- Allen N. Berger
- Steven R. G. Ongena
- Hans Degryse
- Lev Ratnovski
- Andrew Sutherland
- Ross Levine
In Management Information Systems
Citations in the corpus
- Fintech and banking: What do we know? (2019, background): “As Milne and Parboteeah (2016) report, P2P lending has gained traction in both the U.S. and Europe since the financial crisis.”