I need an academic theory that explains the peer-to-peer lending phenomena?

Sorry, I don't have a clue what Transactional Cost Theory or Principal Agent Theory is.

I can only offer my opinion on p2p lending - take it or leave it.

People have identified that the Governments, finance-houses and banks (all accepted authority figures) in place to control monetary spending, have become less trustworthy. This due to multiple reports of jawdropping mistakes - from which lessons are never learned. Or, greedy decisions are made without appropriate and proper accountability or responsibilities being taken for likely long-term effects.

Peer-to-peer banking appears to have risen on the principle that anyone can make mistakes. The masses have decided that they are as likely to make the same mistakes as any banker. They can therefore profit directly by speculative investments in small-to-medium sized Enterprises (SME) without the need to pay banks as the middle-man.

If SMEs are in search of funds for a project, they have a greater chance of success gaining a loan from a peer-to-peer association than they have from previously recognised traditional sources

Surely it is the lack of lending by traditional (Banks) lenders?

The other point is that it pools small lenders. A business wants to borrow £100k for example. It is easier to get 100 lenders at £1000 each than one lender. Also these lenders mostly are unsophisticated. It is fine while interest rates are stable as at the momenet and maybe for some time in the future. But what if interest rates (and inflation) start to rise? Those loans running will look ridiculous from the lenders viewpoint. Low interest rates and long timeframes are the most riskiest investment (avoid the crocodile! It's long and it's low!). I am wondering how P2P returns/risk compare to the retail bond market, for example LSE 43/4% 2021 (issued at par)

i imagine some adults are nonetheless afflicted by technique of peer rigidity. yet maximum folk have realized our lesson. i might want to outline peer rigidity as someone of your age that is attempting to get you to do some thing that you gained't do below ordinary circumstances. those who do the pressuring know what they are doing and take income of peoples vulnerability.