Cyberfinancing for Economic Justice

Lisa T. Alexander

University of Wisconsin Law School

August 21, 2012

4 Wm & Mary Bus. L. Rev. 309 (2013)
Univ. of Wisconsin Legal Studies Research Paper No. 1224

This article argues for the socially optimal regulation of online peer-to-peer (P2P) lending and crowdfunding to advance economic justice in the United States. Peer-to-peer lending websites, such as Prosper.com or Kiva.org, facilitate lending transactions between individuals online without the involvement of a traditional bank or microfinance institution. Crowdfunding websites, such as Kickstarter.com, enable individuals to obtain financing from large numbers of contributors at once through an open online request for funds. These web-based transactions, and the intermediary organizations that facilitate them, constitute emerging cyberfinancing markets. These markets connect many individuals at once, across class, race, ethnicity, nationality, space, and time in an interactive and dynamic way. During a time of significant economic distress in the United States, these markets also represent an unprecedented economic development opportunity for historically marginalized economic actors. Yet, no legal scholar has addressed the implications of these developments for economic justice in the United States. Drawing from the fields of law and geography, social networking theory, and comparative institutional analysis, this Article conceptualizes these new markets as "cyberspaces," similar to geographic spaces, whose laws, norms, and rules will partially determine who will benefit from the economic opportunities that arise in these spaces. The recently enacted Jumpstart Our Business Startups (JOBS) Act does not facilitate substantial distributive justice in crowdfunding markets. The U.S. Government Accountability Office (GAO), which produced a report in response to the 2010 Dodd-Frank Wall Street Reform Act's mandate that it study the P2P lending industry, has also failed to recommend a regulatory structure that will facilitate economic justice. This Article recommends that a range of federal regulators such as the U.S. Securities and Exchange Commission(SEC), the new Consumer Financial Protection Bureau (CFPB), and the U.S. Treasury Department (Treasury), should collaborate to implement a revised Community Reinvestment Act (CRA) that would promote economic justice in these markets.

Number of Pages in PDF File: 76

Keywords: Social networking, cyberlaw, peer-to-peer lending, crowdfunding, banking law, law and geography, community economic development law and securities law

JEL Classification: K2, G210, G280, K220, O1, O16

Open PDF in Browser Download This Paper

Date posted: April 25, 2013 ; Last revised: November 2, 2014

Suggested Citation

Alexander, Lisa T., Cyberfinancing for Economic Justice (August 21, 2012). 4 Wm & Mary Bus. L. Rev. 309 (2013); Univ. of Wisconsin Legal Studies Research Paper No. 1224. Available at SSRN: http://ssrn.com/abstract=2255452

Contact Information

Lisa T. Alexander (Contact Author)
University of Wisconsin Law School ( email )
975 Bascom Mall
Madison, WI 53706
United States
HOME PAGE: http://law.wisc.edu/profiles/index.php?iEmployeeID=81
Feedback to SSRN

Paper statistics
Abstract Views: 1,118
Downloads: 209
Download Rank: 100,784
Paper comments
No comments have been made on this paper

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.750 seconds