This form of borrowing and lending is much cheaper unlike the traditional lending businesses like credit cards. Hence, borrowers in pursuit of cheap credit will definitely opt to borrow through prosper.com than their bank. Consequently, according to (Arnold and Harzog 75) the traditional lending/ borrowing businesses are likely to experience a drop in their lending business as more and more Americans are opting for peer-to-peer lending.
Secondly, the business model of prosper.com does not require borrowers to deposit collaterals to get loans. Therefore, borrowers in pursuit of small loans will opt for prosper.com due to minimal lending requirements. Subsequently, this will lead to a fall of traditional lending/ borrowing businesses.
According to (Arnold and Harzog 78) customers of traditional lending businesses will most likely shift to the peer-to-peer lending business model offered by companies such as prosper.com, because of low interest rates and minimal lending requirements. This will definitely lead to a decline in borrowing from traditional lending