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P2P lending rises in Korea in Q3

[THE INVESTOR] Peer-to-peer lending in South Korea rapidly grew in the third quarter, reaching 188 billion won (US$166 million), according to the data compiled by industry tracker Crowd Institute

P2P lending refers to a new type of loan extension to individuals or businesses through social network services or the Internet, and covers a wide range of services, including loans to startups and self-employed businessmen with their interest rates on such services hovering at 8 percent. The borrowers are required to redeem the principal and interest on a monthly basis.

Local banks shunned lending to such small businesses amid a protracted economic slowdown, but for investors hunting for high returns, P2P lending emerged as an alternative investment tool amid record low interest rates in Asia‘s fourth-largest economy.

The alternative lending service has gained popularity in the past few years, with accumulated P2P loans reaching over 150 billion won as of June this year, and the figure is expected to top 300 billion won by the end of the year.

Korea Herald daum