P2P returns are most affected by bank deposits
Analysts of the Robocash platform studied 6 investment assets to find a correlation between their returns and the P2P market dynamics. The specialists evaluated the behavior of assets through the Granger test*.
The test results show that bank deposits influence the change in P2P yield more than others over a six-month period. “To develop their business, P2P lending platforms often resort to bank loans for additional funds. If the key interest rate rises, then borrowed money becomes more expensive. To remain financially sound, a P2P platform needs to increase its rates too in the short term to avoid unbalancing its debt structure.” - experts comment on the results.
Assets such as currency or gold also have an impact on the dynamics of P2P investments, but to a lesser extent. The higher their potential yield, the lower P2P returns, but the effect of influence is estimated at 15 months or more.
At the same time, riskier assets cause a faster P2P economy reaction. Cryptocurrency has an impact on P2P dynamics after a month. “The drop in cryptocurrency yields can provide the market with an influx of “risky” investors. When withdrawing money from digital currency for any reason, investors are more likely to prefer another high yield instrument such as P2P or stocks.” - add specialists.
* - The Granger causality is an econometric test used to verify the usefulness of one variable to forecast another.