That’s (type of) the idea behind peer-to-peer lending.

“It originally developed with households which can be searching for loans that are unsecured financed by other households. That’s all it really is: crowdsourcing customer loans,” said William Bazley, assistant teacher of finance during the University of Kansas.

In their article that is new Real and personal ramifications of on the web Lending,” Bazley examines the fledgling industry, analyzing information that reveals why this contemporary method of borrowing is proliferating. He recently won the honor for Best Paper on FinTech in the Northern Finance Association seminar in Vancouver.

“ When old-fashioned credit becomes scarce, such as for instance whenever banking institutions merge or there’s a natural tragedy, gaining access to these areas and loan services and products moderates a number of the decline in start up business establishments,” Bazley said.

He explains exactly how these loans temper the results of old-fashioned credit scarcity by supporting business growth that is small.