Prosper has done a lot of work to make data transparent. Increasingly economists and credit analysts have started to study the Prosper model.

Economists Ginger Zhe Jin and Seth Freedman of the University of Maryland have just published a study looking at Prosper since inception to determine average returns.

The most interesting finding is that the probability for a loan to default peaks at around the 10th month and then goes down from there. Prosper's average portfolio as a whole is currently 9.7 months which is the peak of the curve.

The study also showed that the best returns were seen for loans whose interest rate was up to 25%. The implication is that borrowers willing to pay the higher rates are riskier. Maybe an obvious conclusion but there are many folks that come to Prosper seeking only high risk loans and quickly get into problems and become dismayed. Balanced portfolios do better.

The study, titled "Dynamic Learning and Selection: the Early Years of Prosper.com" is a very interesting read for anyone interested in the metrics behind lending.