What type of lending involves transactions between peers, often facilitated by online platforms?

Peer-to-peer lending is a type of financial transaction where individuals lend and borrow money directly from each other, typically facilitated by online platforms that connect borrowers with potential lenders. This model eliminates the need for traditional financial institutions, such as banks, to act as intermediaries.

In peer-to-peer lending, borrowers often seek loans for various personal needs, such as debt consolidation, home improvements, or other expenses, while lenders can earn interest on the money they lend. This system tends to offer more favorable terms for both borrowers and lenders compared to conventional lending routes, as the platforms often charge lower fees and provide competitive interest rates.

The other options represent different forms of lending or borrowing. Traditional banking refers to loans provided by established banks, which follow strict regulatory processes and often have higher operational costs. Public borrowing usually involves governments raising funds through the issuance of bonds. Crowdfunding involves raising small amounts of money from a large number of people, typically for specific projects or ventures, rather than representing a direct lending relationship.