Peer-to-Peer Lending as an Alternative Investment Asset Class in the EU

Abstract

The aftermath of the 2007-2009 financial crisis and European debt crisis proved to be a transformative event to financial markets, primarily in the areas of fixed-income asset yields and asset price appreciation due to wide-spread credit contraction at the retail level. After worldwide markets collapsed for equities and many corporate debt securities, frightened investors liquidated holdings at absurdly low prices. However, the worldwide recovery, while uneven, remains underway. Yet despite the recoveries in the broader indices, individual investors at the retail level have not widely shared in market gains after exiting from their investments during the crises. As a result of uncomfortably high asset prices and the lack of income potential to investment-grade fixed income investments, new alternatives are sought which may present better yield-earning potential amidst the current credit market environment made available by certain Fintech companies.