A parallel unregulated lending sector may emerge and rapidly acquire scale online and, once established, prove "very difficult to tackle," warned London policy shop Policis in a study for the Review of Small Amount Credit Contracts in Australia. Policis said the study rested on "two large transactional credit reference databases; analysis draws on direct interrogation of quantitative data drawn from a transactional database of 9.4 million small sum loan transactions from across the US over the years 2010-2014 and aggregated time-series data on 28.9m transactions for the years 2001-2011." "In the US, the development of a large online market has been a game-changer for small sum lending," it declared."Technological trends - in combination with regulatory intervention which has created significant credit exclusion and therefore market opportunity for illegal lending - has resulted in the emergence of a large unregulated market for small sum lending alongside the licensed, regulated sector."It is clear, both from the US and from the experience of other markets, including the UK and Japan, that where supply is restricted, demand does not go away. "The US experience is that demand is rather diverted from storefront to online markets and from the regulated to the unregulated sector. "Where consumers cannot obtain credit from legitimate suppliers, unregulated lenders move in to take advantage of unmet demand." Policis said the US experience between 2005 and 2012 showed that unregulated markets could "emerge rapidly and achieve significant scale and that, once established, can prove very difficult to address. "Since circa 2005 online small sum lending in the US has grown rapidly, with an unregulated sector developing in parallel to the licensed sector, but on a faster growth trajectory."Policis said that, by 2012, "unlicensed lenders dominated the market, accounting for almost six in ten of all small sum online loans in the US, with 41 per cent of these loans made by lenders operating offshore, from a wide variety of jurisdictions."