Brief thoughts re a recent Barbara Schechter article: Marketplace lenders step out of the shadows in Canada — should we be worried?
I tweeted on this. Some additional comments. Peer to peer lending is different from bank lending in that it does not result in an increase in money supply growth. It may result in an increase in velocity of money supply, something which has been dropping of late in many economies as a result of quantitative easing and a number of other dynamics. It should also increase the efficiency of the intermediation system by offering lower interest rates and quicker access to credit to many borrowers. There are some cons: one of which is that it will increase the liquidity risks in the system in the event of an economic downturn/ financial market crisis. This of course depends on how many may view their loans as money like when they have been transformed and how this market place securitises the loan book. At the present moment in time it may also increase the amount of consumer debt over and above safe levels, although this would not necessarily be an issue in less leveraged environments.