PEER-TO-PEER LENDING: Structures, risks and regulation

In this paper we outline the key characteristics of peer-to-peer (P2P) lending, the risks involved and alternative approaches to regulating P2P platforms. We argue that P2P lending is an example of how modern technology enables the integration of a range of economic functions, including market operator, financial services provider and credit broker. This removes the basis for separate legislative treatment of financial products and credit, and existing regulatory distinctions between different types of financial service providers. Arguably, a new approach to market regulation is warranted which is more consistent with emerging institutional arrangements. An earlier version of this paper was presented at the 21st Melbourne Money and Finance Conference.