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Finally, it is important to reiterate that the best estimate of net returns from the entire portfolio of Prosper loans are roughly 6% as demonstrated by an independent University of Maryland study conducted using Prosper’s data, which is fully transparent and publicly available via Prosper’s API and data downloads.
When I tried to take a look at the actual study I am not able to.From here: http://blog.prosper.com/2008/06/10/new-study-on-prosper-returns-and-dynamics/The link is to this PDF:http://terpconnect.umd.edu/~ginger/research/Freedman-Jin-ProsperStudy-061008.pdfHowever, I am not able to view it. Can anyone else view it?
However, as lenders realize theactual risk on the Internet, the P2P market has excluded more and more subprime borrowersand evolved towards the population served by traditional credit markets. This suggests that,unless P2P platforms can improve the power of social networks for borrowers with low creditscores, P2P lending is likely to compete head-to-head with traditional banks in the future andwould not provide a viable alternative for those excluded from traditional credit markets.
page 33 ConclusionQuoteHowever, as lenders realize theactual risk on the Internet, the P2P market has excluded more and more subprime borrowersand evolved towards the population served by traditional credit markets. This suggests that,unless P2P platforms can improve the power of social networks for borrowers with low creditscores, P2P lending is likely to compete head-to-head with traditional banks in the future andwould not provide a viable alternative for those excluded from traditional credit markets.
Quote from: bamalucky on March 01, 2010, 09:35:45 pmpage 33 ConclusionQuoteHowever, as lenders realize theactual risk on the Internet, the P2P market has excluded more and more subprime borrowersand evolved towards the population served by traditional credit markets. This suggests that,unless P2P platforms can improve the power of social networks for borrowers with low creditscores, P2P lending is likely to compete head-to-head with traditional banks in the future andwould not provide a viable alternative for those excluded from traditional credit markets.Even then, I'm not seeing how Prosper CAN compete head-to-head with traditional banks given the fees and non-competitive interest rates Prosper offers.ETA: nominate 4 lobby
ETA: nominate 4 lobby
...our IRR estimates may have overestimated the return of investmentbecause we do not consider any cost that lenders may incur in processing Prosper information.The time that lenders spend on screening listings and digesting Prosper history could be longand stressful.
I cant find that paper anywhere, but I did find this paper with a date of 02/01/2010http://kuafu.umd.edu/~ginger/research/Freedman-Jin-Feb2010.pdf
It's easy for them to respond & allow comments on a blog that is 2 years old & you can only see with a direct link.
Quote from: NewHorizon on March 01, 2010, 09:44:18 pmQuote from: bamalucky on March 01, 2010, 09:35:45 pmpage 33 ConclusionQuoteHowever, as lenders realize theactual risk on the Internet, the P2P market has excluded more and more subprime borrowersand evolved towards the population served by traditional credit markets. This suggests that,unless P2P platforms can improve the power of social networks for borrowers with low creditscores, P2P lending is likely to compete head-to-head with traditional banks in the future andwould not provide a viable alternative for those excluded from traditional credit markets.Even then, I'm not seeing how Prosper CAN compete head-to-head with traditional banks given the fees and non-competitive interest rates Prosper offers.ETA: nominate 4 lobbyOh that one is simple. A lot of banks don't even offer unsecured loans anymore, for example Bank of America.
