Evaluation of the financial efficiency of peer to peer lending platforms

Abstract

Peer-to-peer lending is a rapidly growing way of borrowing and investing, which is already becoming a serious competitor to emerging lending market participants or companies which have a long history of traditional investment methods. The popularity of peer-to-peer lending is determinated by the development of financial technologies, the increase in the availability of the internet, and the ease of use the platforms. Although these platforms promise a high return on investment, investments diversification opportunities, and borrowers are attracted by relativity low loan prices, it is difficult to assess the financial efficiency of these platforms and to little attention is paid in the scientific literature. In this article are discussed the concept of peer-toper lending, the factors that have led rapid growth in popularity, and evaluates the financial efficiency of peer-to-peer lending platforms from perspective of the investors, borrowers and platform operators. Efficiency is assessed on the basis of the analysis of financial indicators of mutual lending platforms in Lithuania, comparing the products offered by different platforms. Much attention are paid for the concept, causes and development of peer-to-peer lending platforms in global financial market. Finally, attempts are made to disclose indicators of investors, borrowers and peer-to-peer lending platforms that can be used to assess the financial performance on peer-to-peer lending platforms.