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Distributed Lending

Along with the phenomenon of micro-lending to the poor, the idea of social lending is starting to emerge. What’s the old saying? Banks only lend money to people who don’t need to borrow? Both of these trends require that we change the way we think about trust and risk. It also may change the way we think about financing. By using a dutch auction to set interest rates in a new online market, we may see loans that a bank would never consider, and higher interest rates to cover the additional risk. This is securitization of debt at a micro-level. If theĀ long tail of the debt market is as large, or larger, than the head — social lending is a trend that bears watching.

Published in economics innovation zettel

One Comment

  1. many loan companies offered micro-lending to the poor, which took to a big hit that's why competitors are thinking of new ways to get clients which i believed is social lending.

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