Growing Pains: The Changing Regulation of Alternative Lending Platforms

44 Pages Posted: 26 Jan 2019

See all articles by Ding Chen

Ding Chen

University of Sheffield; University of Cambridge - Centre for Business Research (CBR)

Anil Savio Kavuri

Centre for Applied Macroeconomic Analysis

Alistair Milne

Loughborough University - School of Business and Economics

Date Written: January 14, 2019

Abstract

We review the legal and regulatory framework covering alternative (‘peer-to-peer’ or ‘marketplace’) lending platforms in the US, China, the UK and more briefly other countries. The main regulatory concerns are (i) enforcing consumer credit rules for unsecured personal lending; and (ii) protection of uninformed retail investors from mis-selling and platform failure. Alternative lending was first established with little regulatory oversight, but there has been substantial reregulation – first in the US via the 2008 SEC decision that platform investments are securities; subsequently in the UK, China and other countries. We anticipate further reregulation to protect retail investors, limiting the funding of loans from the ‘crowd’. Promoting credit supply through alternative lending platforms requires also institutional investor participation and embracing the use of technology in platform regulation (‘RegTech’).

Keywords: P2P Lending, Loan-Based Crowdfunding, Consumer Protection, Investor Protection, Banking, Banking Competition, Financial Technology, Financial Regulation, Marketplace Lending

JEL Classification: G21, G23, G28, K22

Suggested Citation

Chen, Ding and Kavuri, Anil Savio and Milne, Alistair K. L., Growing Pains: The Changing Regulation of Alternative Lending Platforms (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=3315738 or http://dx.doi.org/10.2139/ssrn.3315738

Ding Chen

University of Sheffield ( email )

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Anil Savio Kavuri

Centre for Applied Macroeconomic Analysis ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Alistair K. L. Milne (Contact Author)

Loughborough University - School of Business and Economics ( email )

Epinal Way
Loughborough
Leicestershire, LE11 3TU
United Kingdom

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