Peer-to-peer lending and financial innovation in the United Kingdom

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 29 April 2016

Working Paper No. 598
By Ulrich Atz and David Bholat 

Peer-to-peer (P2P) lending — direct lending between lenders and borrowers online outside traditional financial intermediaries like banks — first emerged in the United Kingdom and the world with the launch of Zopa in 2005. Our paper provides a quantitative analysis of nearly 14 million loan agreements. We lay bare the history of P2P lending from its beginning, showing the regional geography of P2P lending in the United Kingdom. We suggest that the history of P2P lending can shed light on financial innovation in general. We base our conclusions on four semi-structured interviews with the founders of the three most significant UK P2P platforms (Zopa, RateSetter, and Funding Circle).

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