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Growing pains: The changing regulation of alternative lending platforms

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posted on 19.02.2019 by Ding Chen, Anil Kavuri, Alistair Milne
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’).

History

School

  • Business and Economics

Department

  • Business

Citation

CHEN, D., KAVURI, A.S. and MILNE, A., 2019. Growing pains: The changing regulation of alternative lending platforms. Available at https://ssrn.com/abstract=3315738

Publisher

SSRN

Version

SMUR (Submitted Manuscript Under Review)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2019

Notes

This is a working paper and it is in closed access.

Language

en

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