The stars are aligning for marketplace lending platforms, but they need to step up the pace of innovation if they want to give the banks a real run for their money, says Manuel Stagars, CFA, CAIA, ERP.
In addition to carefully explaining how the financial sector maneuvered itself into the financial crisis of 2007–08, The End of Banking presents several unconventional ideas to do away with regulatory capital arbitrage that sticks taxpayers with the bill for bankers’ risk taking. It also promises a fairly straightforward policy framework that proposes to reduce shadow banking, decentralize financial services from too-big-to-fail banks, improve regulation, and realign the private and the public sector with transparent monetary policy.
Time and money are of the essence in containing a viral outbreak, such as in the current Ebola crisis. The international community and several development organizations have made more than a billion dollars available for aid. If impact investors rose to the challenge with innovative funding vehicles, they could mobilize large amounts of capital to complement the existing efforts.
When investment is about capital alone, entrepreneurs have better alternatives today in the form of choosing nimble business models or crowdfunding. Conventional, money-only venture capital could indeed be considered a Giffen good. However, by contributing intellectual firepower and entrepreneurial networks, venture capitalists can accelerate the growth of start-ups better than capital alone.
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