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Pages:
7 pages/≈1925 words
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Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
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Topic:

Fintect

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Check Abstract 

This research examined how peer-to-peer (P2P) lending expansion affects bank risks, particularly insolvency and illiquidity risks. I contrasted a case of a benchmark in which banks are the P2P lending platforms work mainly in the low-credit business sector, only participants in the loan market with a segmented market case in which the loan market is segmented by borrowers' creditworthiness. In both the low- and high-credit segments bank work. My findings indicate that sustainable P2P lending requires a proper distinction of roles between banks and P2P lending platforms. P2P lending platforms function in the low-credit segment and the participation of banks in P2P lending is limited so that P2P lending growth is not adverse to bank stability.

Content:

 

Peer-to-peer lending

Abstract

This research examined how peer-to-peer (P2P) lending expansion affects bank risks, particularly insolvency and illiquidity risks. I contrasted a case of a benchmark in which banks are the P2P lending platforms work mainly in the low-credit business sector, only participants in the loan market with a segmented market case in which the loan market is segmented by borrowers' creditworthiness. In both the low- and high-credit segments bank work. My findings indicate that sustainable P2P lending requires a proper distinction of roles between banks and P2P lending platforms. P2P lending platforms function in the low-credit segment and the participation of banks in P2P lending is limited so that P2P lending growth is not adverse to bank stability.

Introduction

FinTech defines emerging inventions aimed at optimizing financial services delivery and use. In almost all instances, through designing algorithms, cloud computing, and applications, FinTech solutions are given. The use of financial technologies has been around since 1886, according to Arneris and the gang. The invention of telegraphs and innovations in transportation (especially railroads and steamships) helped to move financial information across national boundaries.

Many established banks have begun to substitute computers for their current internal processes and paper-based instruments. For example, in 1981, Michael Bloomberg began Innovation Market Solutions (IMS) and created the so-called Bloomberg Terminals, which the financial sector still uses routinely to this day. Banks have been able to resolve money transfers and pending payments in real-time with the launch of Fedwire. Settlement of interbank transfers was often achieved by the actual transfer of cash or gold prior to its implementation.

In the transaction distribution room, FinTech companies develop free goods, such as expense control software, to gather customer data and then cross-pollinate the information with the rest of the community to chart the customer's ability to pay premiums, invest in real estate, purchase mutual funds. Klarna was created in Stockholm Sweden in 2005 with the goal of making it easier for people to buy online. Technology has grown, excited, and changed the world around us over the past 15 years, and our task remains as vital as ever-to make payment as simple, secure, and above all, seamless as possible. In this report, we would have a deeper interpretation of the fintech market model that best fits Klarna and the advantages that digital transformation offers.

91% of employees said that Klarna is a fantastic place to work, compared to 59% of employees at a traditional U.S.-based organization, according to the Confidence Index survey findings. An impressive 96% of "Klarnauts" have suggested that when they enter the firm, they will be at work themselves and are made to feel comfortable, that employees care for each other, and that management is fair and ethical about their practices in business.

I found that the concept of Klarna is about the degree of faith that workers experience in their leaders, the level of pride they have in their careers, and the extent to which their peers appreciate them. Klarna provides versatile choices for payment that are constructed for the new shopper. This offers clients the opportunity at any moment to purchase what they love.

Theoretical Background

There are two incidences to be compared; the benchmark, where banks are existing in a single and the case when the loan market is segmented by borrowers hence P2P lending platforms work under low-credit segment. When dealing with the insolvency risk, borrowers who are in low credit segment will prefer high-risk projects because of the low interest applied to the low-credit market segment (Zhao et al 2017). Potential creditors may not have been able to obtain funding by other means or may want to diversify the structure of their financing. The credit seeker encourages confidence in investors by presenting his project or product on the platform so that they can provide him with the necessary funds for financial consideration. A preliminary credit check of all applicants will be done by the platforms.

There was a reduction in credit risk in the segmented market case as a result of competition and the implication of P2P lending. This result also implies that once banks start participating, either directly or indirectly, in P2P lending, the combined risk would be adv

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