I'm confused. Why are these firms "shutting down" if they don't have any exposure to the loans they brokered?
I mean, the description of the business model sounds like it's a bunch of transactional companies like ebay or paypal or whatever. Those might be expected to "fail" if the overall market shrinks, if expected growth didn't arrive, or if they get beaten by a competitor. But they don't fail "like dominoes". If anything the exit of one player would be expected to strengthen its competitors.
But the headline and analysis is using terminology that make this sound like a credit crisis. Is it?
> the description of the business model sounds like it's a bunch of transactional companies
From the “people that are running these P2P companies don’t actually understand what P2P really is,” these sound more like badly-run Prospers than true P2P lenders.
I mean, the description of the business model sounds like it's a bunch of transactional companies like ebay or paypal or whatever. Those might be expected to "fail" if the overall market shrinks, if expected growth didn't arrive, or if they get beaten by a competitor. But they don't fail "like dominoes". If anything the exit of one player would be expected to strengthen its competitors.
But the headline and analysis is using terminology that make this sound like a credit crisis. Is it?