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Hello and welcome to this talk on peer-to-peer (P2P) lending.
My name is Laura Gonzalez and I am at Fordham University in New York City.
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Outline.
Here is what we will cover in this talk.
First of all, what is peer-to-peer lending?
And why is it receiving attention?
Second, what have we learned so far from research on peer-to-peer lending?
Third, specifically in relation to experimental settings,
what are some of the behavioral findings to date?
Fourthly, is there any evidence on international patterns?
There are currently over 30 peer-to-peer lending sites operating worldwide.
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What is peer-to-peer lending,
also known as person-to-person lending,
or online social lending?
Peer-to-peer lending is a new for profit financing model.
Since 2005,
the year the first site opened in the United Kingdom,
consumers, entrepreneurs, and small business owners worldwide have borrowed billions,
not from banks or other traditional institutions,
but from virtual strangers they have come in contact with on the Internet.
Peer-to-peer lending platforms connect potential investors
seeking average market returns of over 10 percent
to individuals seeking average loan amounts of about $10,000.
Since objective information about the borrowers is fairly limited,
lenders diversify their investment portfolios by
allocating the small amount to multiple loan applications,
I suppose, to contribute greater amounts to just one or two loan applicants.
Historical loan rates vary from about 2.3 percent for highly rated loans returning about six percent,
to about 14 percent loan rates in the riskiest loan category of returns about 15 percent.
Loan purposes also vary widely;
from weddings, house, car and study expenses,
to small business funding, and quite commonly,
general debt repayments and consolidation.
