Title:
Internet
Based
Social Lending
Abstract: Social lending
is community-based lending. The “family and friends” loans community
has
been extended and formalized to create a marketplace of borrowers and
lenders. In Internetbased Social
Lending (IBSL), the company runs a websitethat connects potential
lenders with potential borrowers. By removing the
overheads and bulky infrastructure of the banking system, IBSL provides
lenders
a higher rate of return in exchange for only slightly higher risk.
Borrowers
here are those who are unsatisfied with the rates offered by banks or
those
that fall outside of the traditional banking systems due to
unattractive
credit ratings, high risk profiles or projectbased, sporadic
compensation.
Borrowers are also attracted by the possibility of getting lower
interest
rates. We believe that this has the potential to impact the genesis of
many
small and medium level enterprises, besides providing a perennial
source
of financial leverage. The focus of this paper is not just the
underlying
technology and innovation, but also the market it creates. We take the
example
of one of the key players in the field, Zopa, and study its
organization.
Authors: H. Dhand, G.
Mehn,
D. Dickens, A. Patel, D. Lakra and A. McGrath