Mainstreaming social finance: The regulation of the peer-to-peer lending marketplace in the United Kingdom

Abstract

The article provides one of the first political economy accounts of the regulation of peer-to-peer (P2P) lending in the United Kingdom, drawing on interviews with platforms representing the vast majority of the market at the beginning of the regulatory process. The article links the regulation of P2P lending with debates about regulatory capture. It challenges conventional understandings of its consequences by showing how the regulation of P2P lending displays characteristics of regulatory capture but appears to have realised several aspects of regulators’ visions for a ‘socially useful finance’, rather than facilitating the kind of rent-seeking behaviour that has been identified in the case of other areas of finance. P2P lending is found to represent one of the latest forms of consumer and small business finance that works towards so-called ‘financial inclusion’, with ambiguous social outcomes that necessitate further critical investigation.

Keywords

Peer-to-Peer lending regulatory capture socially useful finance marketplace lending financial innovation

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