The economic problems of crowdlending platforms and the importance of control mechanisms

The economic problems of crowdlending platforms and the importance of control mechanisms

Peer-to-peer (“P2P”) and peer-to-business (“P2B”) platforms have changed the dynamics in the credit markets. They have become more appealing and useful to the public. In addition, they have become increasingly attractive to investors, who are either looking to invest in P2P and P2B companies themselves, or to utilise borrower-lender matchmaking services offered in these platforms. However, as access to credit becomes progressively effortless thanks to these platforms, market failures surface. Given the significance P2P and P2B platforms have gained in the corporate credit market, we examine whether it possible to mitigate these market failures.

Market Insight 17-12-2019 Crowdlending and control