Incorporating P2P Lending Practices

Credit unions and community banks can steal a page from Lending Club’s playbook. University professors recently researched the effect of personal relationships on marketplace lending platforms. They discovered three effects: Pipe effect. Friends of a borrower, especially close and off-line friends, act as financial “pipes” by lending money to the borrower. Social herding effect. When friends of a potential lender, especially close friends, place a bid, a “social herding” effect...

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