P2P Lending in Banking Industry
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Questions and Answers

What is the primary way in which banks earn profit according to the traditional banking model?

  • Charging borrowers high interest rates
  • Benefiting from the spread between deposit and lending rates (correct)
  • Investing in ventures through crowdfunding
  • Earning a fee from P2P lending firms

    • What benefit do savers receive from P2P lending as compared to traditional banking?

  • Tax-free deposits
  • Immediate withdrawals
  • Higher interest rates (correct)
  • Lower risk

    • Why might it take time for all of a large deposit to be lent out in P2P lending?

  • Acceptance of high-risk borrowers
  • Low demand for loans
  • High interest rates for borrowers
  • Limited availability of suitable borrowers (correct)

    • What is a key drawback associated with immediate withdrawals in P2P lending?

    <p>Reduced interest rate on remaining funds</p> Signup and view all the answers

    How does crowdfunding differ from traditional P2P lending?

    <p>Crowdfunding relies on donations rather than loans.</p> Signup and view all the answers

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