Tag Archives: technology

The growth of peer-to-peer lending platforms and prospects for banks’ disintermediation – hype or real threat?

Paolo Siciliani.

Peer-to-peer lending platforms (P2P platforms) emerged after the financial crisis by catering for pent-up demand for unsecured borrowing from individuals and small businesses.  Ten years after the conception of P2P platforms, the question is whether they may soon start to penetrate more mainstream lending markets and thereby challenge high street lenders.  For example, according to the latest survey compiled by Nesta, P2P lending for the year 2015 was the equivalent of 3.9% of new loans lent to SMEs, although the outstanding stock of P2P lending is much lower.  This post considers how seriously in practice to take this threat to the traditional banking model.

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Filed under Banking, Financial Stability

Extracting insight from complexity

John Hill and Jamie Coen.

The financial system is complex and highly interconnected.  Indeed, interactions between agents are key to its functioning.  But these interconnections have the potential to turn small shocks into systemic crises.  Understanding the complex nature of these interconnections is important, but can also be difficult. In this post we introduce new tools designed to analyse the financial network and help analysts build a better understanding of risks posed by interconnectedness.

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Filed under Financial Stability, Macroprudential Regulation, New Methodologies

High-frequency trading and market quality: What’s the deal?

Evangelos Benos.

It’s been a while now since high-frequency-trading (HFT) made its debut in the financial market landscape. Initially, little was known about it and regulators and market participants alike were naturally concerned about its potential impact on markets. Nevertheless, over the past few years we have learned quite a bit more about HFT. So what’s the deal with HFT? This short blog post briefly describes the evolution of HFT, summarizes the current understanding of the impact of HFT on market quality and highlights some aspects of HFT activity that are still contentious. Regardless, I believe, the inescapable conclusion that so far emerges is that HFT has mostly had a positive impact on market functioning.

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Filed under Financial Markets, Market Infrastructure