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Ray Fisman reports on peer-to-peer lending:
...an increasing number of borrowers are turning to "peer to peer" networks that connect individual borrowers directly to lenders, cutting out the banking middleman. These networks have now financed nearly a half a billion dollars in lending. This is still a long way from the $931 billion in loans and leases that Bank of America had on its balance sheet in 2008, but it's growing rapidly. Peer-to-peer lenders describe themselves as a solution to many of the banking sector's current weaknesses, from the lack of small-business finance to the evils of payday lending (which now serves as financing of last resort for those shut out of formal banking altogether).Economists have been studying these peer-to-peer lending programs from the beginning, and their findings are now starting to show up on the Web. They've discovered that while the sites may be useful for some high-risk borrowers--those who stood little chance of attracting loans from traditional banking institutions--these credit markets also result in loan decisions tainted by human frailty and bias. It seems that the middleman--with his credit models and balance-sheet analysis for evaluating prospective borrowers--may provide some value after all.
Let's consider that a "no." (Note: the answer to any question posed in the headline or subhead of a magazine story is almost always no.)
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