P2P lending

Peer-to-peer (P2P) lending has become an increasingly popular form of alternative finance in recent years, allowing individuals to lend and borrow money directly from each other through online platforms (Akhtar, 2019).

The first modern P2P lending platform, Zopa, was launched in the UK in 2005, and since then, many other platforms have emerged around the world, including LendingClub, Prosper, and Funding Circle (Belleflamme, Lambert, & Schwienbacher, 2014).

While P2P lending has the potential to increase access to credit and offer higher returns to investors, it also poses risks to lenders and borrowers alike, including the potential for default, fraud, and platform failures (Laufer & Cozmanova, 2020).

As a result, there has been increasing regulatory scrutiny of the P2P lending industry, with many countries implementing laws and regulations to protect investors and borrowers (Cumming & Johan, 2019).

According to archaeological evidence, the earliest civilizations in Mesopotamia are generally considered to have emerged around 4000 BCE, during the Early Bronze Age (Oates, 2010). This period saw the development of complex societies and the invention of writing, as well as early forms of lending and borrowing (Michalowski, 2017).

While there is limited evidence of formalized financial systems during this period, the use of clay tablets to record loans and debts suggests that lending and borrowing practices did exist (Gelb, 1963). However, these practices were likely based on social and economic relationships between individuals and communities, rather than on the formalized peer-to-peer lending systems seen today (Wenke, 2015).

It is also worth noting that there were no formal legal systems in place during this period, and any abuses or conflicts related to lending and borrowing would have been resolved through social and cultural norms (Van De Mieroop, 2015).

The market value of peer-to-peer (P2P) lending has been steadily growing in recent years, driven by increasing demand for alternative finance and advancements in technology (Statista, 2021).

According to Statista, the global market value of P2P lending was estimated to be $67.9 billion in 2020 and is projected to reach $461.3 billion by 2027, with a compound annual growth rate (CAGR) of 29.7% from 2020 to 2027 (Statista, 2021).

This growth is attributed to several factors, including increasing awareness and acceptance of P2P lending among borrowers and investors, the rise of mobile and digital banking, and regulatory support for the industry in many countries (Cumming & Johan, 2019).

However, the P2P lending market is also facing challenges such as increasing competition, rising defaults and delinquencies, and regulatory uncertainty (Akhtar, 2019).

Despite these challenges, the market value of P2P lending is expected to continue to grow in the coming years as it offers an alternative source of funding for individuals and small businesses and provides investors with new opportunities for diversification and higher returns.

References:

Akhtar, N. (2019). Peer-to-peer lending: A review of the literature. Journal of Financial Stability, 41, 107-116.

Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585-609.

Cumming, D., & Johan, S. A. (2019). Handbook of blockchain, digital finance, and inclusion: Cryptocurrency, FinTech, InsurTech, and regulation. Academic Press.

Gelb, I. J. (1963). The older pre-babylonian forms in legal and economic documents from the Diyala region. Journal of Cuneiform Studies, 17(3), 67-85.

Laufer, U., & Cozmanova, I. (2020). The future of peer-to-peer lending in the European Union. Journal of International Studies, 13(2), 7-25.

Michalowski, P. (2017). Mesopotamia. In The Wiley Blackwell Encyclopedia of Ancient History (pp. 1-5). Wiley-Blackwell.

Oates, D. (2010). Mesopotamia: The invention of the city. Penguin.

Statista. (2021). Global market size of peer-to-peer lending from 2013 to 2027 (in billion U.S. dollars). Retrieved from https://www.statista.com/statistics/866734/p2p-lending-market-size-worldwide/

Van De Mieroop, M. (2015). A history of the ancient Near East, ca. 3000-323 BC. John Wiley & Sons.

Wenke, R. J. (2015). Patterns in prehistory: Humankind's first three million years. Oxford University Press.