Robocash analysts have identified six key factors influencing the profitability of the European P2P market. According to the results, wage and GDP growth has the most importance here.

The average yield of the European P2P market in 2024 ranged from 5.41% to 15.73%. 

Robocash analysts have determined that more than 95% of the variation in rates can be explained by six parameters. 

The average annual growth of salaries has the biggest importance (33.2%). The increase in wages directly contributes to the growing solvency of borrowers and strengthens their financial stability. This, in turn, leads to an increase in the savings rate and a decline in loan defaults. As a result, the risk for investors is reduced and the risk premium decreases, which ultimately contributes to lower profitability of P2P lending. 

The next important factor is the average annual GDP growth (30.8%). GDP growth increases the overall level of economic activity, which stimulates demand for loans among businesses and households. As credit demand grows, competition on P2P platforms also increases, since there are more borrowers looking for financing and investors seeking attractive returns. This favors the profitability of P2P investments, as greater competition and increased supply of credit offers create conditions for higher returns compared to periods of economic stability.

The third top factor is population (13.3%). As the population decreases, the diversification of borrowers on P2P platforms also drops, which leads to a decline in the level of infrastructural and segment diversification of the market. As the number of participants decreases, the overall liquidity of the P2P market also lowers. At the same time, risk concentration grows as dependence on a limited number of reliable borrowers intensifies. All this leads to an increase in the return requirements for P2P investments - investors are looking for higher returns to compensate for higher risks and lower liquidity.

Also among the most influential factors were the inflation rate, government bond yields and the average annual return of the local stock market. 

“It is worth noting that the above influence mechanisms are valid for some average cases of all countries. If we look more deeply into each country, these correlations may be broken due to local peculiarities.” - the experts summarize.