News from around the world
The Economic Times weighed the pros and cons of making investments in bitcoins and P2P lending. The author cites the benefits of marketplace lending like easy credit and a higher annual return compared to other asset classes (e.g. equities, bonds, etc.). However, defaults remain a risk and investors need to research the platform before starting. Some also warn that economic downturns can impede returns, however, this is true of nearly all investments.
BW Disrupt offered five considerations to keep in mind when exploring P2P investing. The author discusses the importance of diversification, choosing many small loans, reinvestment of earnings, long-term planning and historical performance. Many of these critical strategies are applicable to other investment products because they manage risk and capitalize on compounding.
The Investment Observer discussed the rise of P2P in countries like Poland, Greece and Ireland. Based on research these countries have a significant credit gap. Capital needs among households and corporations aren’t being satisfied with conventional lending. Therefore, marketplace lending can offer much-needed support. However, one researcher warned, “As it becomes more unified across Europe, the need for a supervising body and regulation will become more pressing.”
The Week analyzed “How To Tell if Someone Will Repay Their Loan.” The article reviewed several characteristics indicating the responsibility of a borrower. In many cases, lower credit utilization means a greater chance of repayment. The author explains that “people with scores between 751 and 800 were using on average 12 percent of their available credit. By contrast, people with scores under 650 had utilization rates of 63 percent or more.”
Crowdfund Insider reviewed the development of the Alternative Lending Index which calculates the P2P potential across 23 European countries. The data provides a useful overview of which countries could benefit most from marketplace lending. The research offers opportunities for investors interested in getting in early in emerging markets.
Crowdfund Insider credited Bondora in their recent review of cross-border marketplace lending in Europe. They write, “The first platform to tackle cross-border lending was Estonian pioneer Bondora in 2009.”