Web Portal for Matching Loan Requests and Investment Offers in Peer-To-Peer Lending

Web Portal for Matching Loan Requests and Investment Offers in Peer-To-Peer Lending

Luís Martinho (DEI/FEUP - Informatics Engineering, Department of Engineering, University of Porto, Porto, Portugal) and Luís Paulo Reis (DSI/EEUM - Information System Department, School of Engineering, University of Minho, Minho, Portugal & LIACC - Artificial Intelligence and Computer Science Laboratory, University of Porto, Porto, Portugal)
Copyright: © 2013 |Pages: 15
DOI: 10.4018/jwp.2013040102
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Abstract

Online Peer-To-Peer lending has seen some growing media attention since its recent creation. Nonetheless, the systems which provide deal brokerage in this context have yet to be given significant consideration within the scientific community. This paper is part of a broader effort to setup a Peer-to-Peer lending community in Portugal. This work focuses on solving the infrastructural problem of combining investment offers from potential lenders with loan requests from potential borrowers. The combination process must strive for an optimal result, which pleases lenders and borrowers alike, despite their opposing agendas. Simultaneously the combination result should also benefit the platform’s business model, so as to keep it sustainable and profitable. Several optimization metaheuristics, powered by a constraint programming module, were applied to efficiently explore the problem’s solution space and to find optimal solutions. The results achieved with this approach show how metaheuristic-driven optimization can be successfully applied to Peer-to-Peer lending combination problems.
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2. Combination Problem Formulation

The problem of combining loan requests and investment offers, can be considered as an optimization problem, taking the decision variables as the rates at which loans are matched, together with the amounts involved. The constraints would be set by the conditions specified by the members, when placing their terms for intended rates and amounts. The objective function would take into account the stated goals of the platform: to maximize the satisfaction of both borrowers and lenders, while contributing for the platform's profitability.

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