Investors predict growing appetite for alternative finance

European institutional investors say alternative lending will grow 23% by 2017 resulting "in a more robust financial system"

Three-quarters of investors predict that the alternative finance market – including crowdfunding, peer to peer lending, invoice finance and more – will grow rapidly over the next two years, a study by Amicus Finance Plc has reported.

The study found that European institutional investors expect the alternative lending sector to grow by 23% by 2017 thanks to an increasing need for non-traditional finance for small and medium-sized businesses.

74% of investors said significant growth of the alternative finance market will “result in a more robust financial system by lessening the burden on banks” – while 64% said they believed that UK and European small businesses rely too heavily on traditional finance.

John Jenkins, CEO of Amicus, commented on the study: “As the economy continues to recover, institutional investors see a strong opportunity for the capital markets to play a bigger role in financing small businesses, which continue to face capital constraints due to bank deleveraging.

“Institutions increasingly recognise they can generate attractive returns through investing in alternative finance without taking on large risks.”

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