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The global peer-to-peer (P2P) lending market is expected to grow at a compound annual growth rate (CAGR) of 53.06% in the 2016-2020 period, research company Research and Markets said earlier this week in a press release about the release of its latest report on the subject. The report considers the combined lending amount through P2P platforms in the Americas, Asia Pacific (APAC), and Europe, the Middle East, and Africa (EMEA).
One of the key market drivers during the period under review will be the increasing global lending in micro, small and medium-sized enterprises (MSMEs). Meanwhile, the market’s growth would be hindered by the increasing regulatory risks since there are no regulatory framework specifically designed for P2P lending platforms. Instead, they fall under the regulation for consumer banking and other financial institutions, which include laws for the credit life-cycle that includes underwriting, payment terms, agreements and disclosures, advertisements and solicitations, and debt collection practices, as well as for privacy and data security and anti-money laundering.
Government support in P2P lending and crowdfunding is expected to be growing in significance, which is to facilitate investors in making investments in small private businesses. The European Commission, for instance, is evaluating soft-law measures that could help promote P2P lending and crowdfunding across Europe. It is investigating how government funding could be aligned to support P2P lending and crowdfunding platforms and investment opportunities during the forecast period.
The report takes into consideration the present scenario and the growth prospects of the global P2P lending market for 2016-2020, the research company said.
P2P lending is a type of debt crowdfunding where businesses use a specialized online platform to raise small amounts of funds directly from a large number of investors. Borrowers earne interest that is usually at more competitive rates than traditional banking provides.