VIABILITY OF A PEER-TO-PEER LOAN MARKET FOR STUDENTS AND THE UNDERBANKED

摘要

It is difficult to achieve financial stability without access to traditional banking services. "Unbanked" and "underbanked" groups therefore face significant financial hurdles, making them targets for predatory fringe lenders. In this paper, we present the results of a credit survey given to college students and low-income residents of Tacoma, Washington. Our first goal with this survey was to characterize credit use and access among these groups. Given that information, we then could assess the feasibility of developing a viable peer-to-peer (P2P) platform for them that would be a consumer-friendly alternative to fringe lending. We find that there is a need for small-dollar financial assistance, even within our relatively affluent student sample. We discuss the possibility of creating a student P2P market to help them, working through Four Horsemen Investments, a student-run 501(c)(3) not-for-profit organization. Developing such a market on a small scale would be a precursor to expanding it to the local community, where it could help at-risk, low-income families.