University of Oulu

European crowdlending platforms : evaluating risks and comparing platforms from investors’ perspective

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Author: Palomäki, Henri1
Organizations: 1University of Oulu, Oulu Business School, Department of Finance, Finance
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1 MB)
Pages: 61
Persistent link:
Language: English
Published: Oulu : H. Palomäki, 2019
Publish Date: 2019-05-14
Thesis type: Master's thesis
Tutor: Sahlström, Petri
Reviewer: Kallunki, Juha-Pekka
Sahlström, Petri


Lending-based crowdfunding has been growing rapidly during the last decade offering a new asset class for investors to invest in. A number of intermediaries connecting potential borrowers and lenders with each other, called crowdlending platforms, have been founded across Europe. Investors have plenty of options to invest in different kind of high-yielding loans, for instance consumer loans and business loans, through lending platforms. Platform selection is crucial for investors but unfortunately, the literature regarding lending platforms is scarce. Therefore, this seminal study focuses on introducing, discussing and evaluating the key risks related to crowdlending and comparing crowdlending platforms from investors’ perspective. The study answers to the question how to evaluate and mitigate the risks that investors are facing when investing through lending platforms. Further, the study provides a wide overview of European crowdlending market and platform practices.

The empirical part of the study is mostly qualitative and comprises of two different datasets: (i) questionnaire responses from 19 European crowdlending platforms and (ii) hand-collected data from public sources including 108 European lending platforms. Findings of the study show that the crowdlending market is diverse including various business models, loans and practices. The platforms can control and mitigate most of the risks by high-class risk policies and by good-quality practices, which makes platform selection the most crucial decision for investors to make when investing in this relatively new asset class. Remarkable is that the lack of platform transparency and the weak availability of data complicates investors’ evaluation process and makes platform-level comparison challenging. Therefore, I suggest that investors perform a holistic due diligence for platforms before investing, and this study give a useful framework for investors to pay attention to relevant factors when evaluating risks and comparing platforms with each other.

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Copyright information: © Henri Palomäki, 2019. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.