"The virtual moneylender" is one of the most interesting articles of the last weeks. It describes how Prosper.com brings people together to borrow and lend micro-loans outside of the traditional banking system.

One of the really interesting aspects is how Prosper uses social network dynamics to secure its members aganst fraud: Peope organize in groups to better their credit standig or organize funds to invest.

"This sort of peer pressure has long been used as a tool to goad borrowers into paying back micro-loans in the developing world. It reflects, says Elizabeth Warren of Harvard, an axiom of money lending. "Making decisions about whom to repay when you're in financial trouble is less about law and more about social relationships," she points out."
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