Wage growth has biggest impact on European P2P market returns

Wage growth is the biggest factor influencing the profitability of the European P2P market, new analysis has found.

Analysts at Robocash found that average annual salary growth has the biggest sway over the variation in yield rates in the European P2P market, which ranged from 5.41 per cent to 15.73 per cent in 2024.

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They added that the increase in wages directly contributes to the growing solvency of borrowers and strengthens their financial stability, which, 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,” analysts explained.

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The next most important factor influencing yields is GDP growth, which stimulates demand for loans among businesses and households, increasing competition on P2P platforms.

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

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