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The Benefits of Securitisation in the European Peer to Peer Lending Industry

Author

Listed:
  • Dirk Urpani
  • Simon Grima
  • Yannis Thalassinos

Abstract

The 2008 global financial crisis fermented the creation of a financing gap between small borrowers and lending institutions, which may come in scope once again following the global pandemic. Individuals and SMEs requesting funding will get better access to capital if lenders can de-risk their position and hence mitigate their liquidity and cash flow risks. The advent of alternative finance in recent years has brought with it a source of liquidity through the power of the crowd and how this can be maximised through the use of securitisation. Securitisation has been around for a long time and since 2013 this has also been used to de-risk alternative finance and loans generated on a peer to peer (“P2P”) basis. The authors, herein delve into the different risks faced by lenders that offer loans via peer to peer lending platforms and the role that securitisation may play in addressing such risks. The discussion within this article delves further into how securitisation could be regulated and what benefits will be derived from the regulation of securitisation of peer to peer lending. The focus is placed on some themes elicited from the regulatory analysis that is the foundation for any regulatory framework for the regulation of securitisation with peer to peer loans as the securitisation assets.

Suggested Citation

  • Dirk Urpani & Simon Grima & Yannis Thalassinos, 2020. "The Benefits of Securitisation in the European Peer to Peer Lending Industry," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 132-156.
    • Handle: RePEc:ers:ijfirm:v:10:y:2020:i:3:p:132-156
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    References listed on IDEAS

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    1. Simona-Valeria TOMA & Ioana-Veronica ALEXA, 2012. "Different Categories of Business Risk," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 109-114.
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    More about this item

    Keywords

    Peer to peer lending; securitisation; de-risking; alternative finance; finance gap.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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