How P2P finance participates as the solution of SME financing difficulty in China: a case study

SMEs finance difficulty has been a big problems in China for decades while significant solutions are still absent. However, in recent years, P2P finance appears as an innovation of financial industry, it has been widely accepted by the financial market worldwide. Its capability of connecting private capital to specific cash demand is considered as a powerful strength to solve many financial problems. Thus, the question how P2P finance would be as a solution to the SMEs’ finance difficulty arise. Based on the existing knowledge, this paper designed and implemented a case study of seven SMEs which have used P2P finance as their external financial resource. As a result, this study discovered the main strength of P2P finance, the biggest concerned from the SMEs towards their finance difficulty, and suggestions for improving the P2P finance industry in China.As dificuldades financeiras das SMEs tem sido um grande problema na China durante décadas enquanto soluções significantes continuam ausentes. Entretanto, nos últimos anos P2P finance aparece como uma inovação na indústria financeira e vem sido altamente aceita pelo mercado financeiro ao redor do mundo. Sua capacidade de conectar capital privado a uma especifica demanda de dinheiro é considerada como uma poderosa força para resolver muitos problemas financeiros. Assim, a questão de como P2P finance seria uma solução para os problema de SMEs surgem. Baseando-se no conhecimento existente, esse trabalho designa e implementa estudos de caso de sete SMEs que usaram P2P finance como seu recurso financeiro externo. Como resultado, este estudo descobriu as principais forças do P2P finance, as maiores preocupações das SMEs no sentido de sua dificuldade financeira e sugestões para melhorar a industria do P2P na China

The Business Models and Economics of Peer-to-Peer lending. ECRI Research Report No 17, May 2016

This paper reviews peer-to-peer (P2P) lending, its development in the UK and other countries, and assesses the business and economic policy issues surrounding this new form of intermediation. P2P platform technology allows direct matching of borrowers’ and lenders’ diversification over a large number of borrowers without the loans having to be held on an intermediary balance sheet. P2P lending has developed rapidly in both the US and the UK, but it still represents a small fraction, less than 1%, of the stock of bank lending. In the UK – but not elsewhere – it is an important source of loans for smaller companies. We argue that P2P lending is fundamentally complementary to, and not competitive with, conventional banking. We therefore expect banks to adapt to the emergence of P2P lending, either by cooperating closely with third-party P2P lending platforms or offering their own proprietary platforms. We also argue that the full development of the sector requires much further work addressing the risks and business and regulatory issues in P2P lending, including risk communication, orderly resolution of platform failure, control of liquidity risks and minimisation of fraud, security and operational risks. This will depend on developing reliable business processes, the promotion to the full extent possible of transparency and standardisation and appropriate regulation that serves the needs of customers

The business models and economics of peer-to-peer lending

This paper reviews peer-to-peer (P2P) lending, its development in the UK and other countries, and assesses the business and economic policy issues surrounding this new form of intermediation. P2P platform technology allows direct matching of borrowers’ and lenders’ diversification over a large number of borrowers without the loans having to be held on an intermediary balance sheet. P2P lending has developed rapidly in both the US and the UK, but it still represents a small fraction, less than 1%, of the stock of bank lending. In the UK – but not elsewhere – it is an important source of loans for smaller companies. We argue that P2P lending is fundamentally complementary to, and not competitive with, conventional banking. We therefore expect banks to adapt to the emergence of P2P lending, either by cooperating closely with third-party P2P lending platforms or offering their own proprietary platforms. We also argue that the full development of the sector requires much further work addressing the risks and business and regulatory issues in P2P lending, including risk communication, orderly resolution of platform failure, control of liquidity risks and minimisation of fraud, security and operational risks. This will depend on developing reliable business processes, the promotion to the full extent possible of transparency and standardisation and appropriate regulation that serves the needs of customers

Lending Crowdfunding : Principles and Market Development

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Peer-to-Peer Lending Industry and Risk Control Measures

With the rise of the Internet, a new form of financing, peer-to-peer lending (P2PL), has embraced its opportunities in the 21st Century. After Zopa, the world\u27s first financial company that offers P2P loans, was founded in the UK, the U.S. also seized the trend and witnessed the launch of Prosper in 2006, followed by Lending Club. The IPO of Lending Club in 2014 created a faster momentum for the development of similar companies in the industry and cleared some concerns regarding SEC regulations. However, given the business model that P2PL companies adopt and the economic characteristics of P2P loans borrowers, the industry is still facing controversies over default risk controls. Therefore, it is important to understand the industry and its risk control measures. This paper presents an overview of the historical background of the P2PL industry and discusses its advantages and disadvantages that lead to the important role of risk control. By adopting the linear probability model and the logistic regression model, this paper proposes a method of measuring the default risk of P2P loans using the 2007-2011 Lending Club loan dataset. It finds that 8 variables in particular, employment length, inquiries by creditors in the last 6 months, installment, interest rate, annual income, public record, revolving line utilization, and term. While only annual income and public record have a negative relation with default risk, all the remaining 6 variables will contribute to a higher default risk

Internet-based Consumer Finance in Developed Countries and in China

Qiantu Financial Group, based in Hangzhou, China, wants to know how to improve its credit risk management strategies. We identified the credit risk management strategies used by well-established P2P companies around the world to determine common practices and interesting methods for assessing consumer credit risk. Through interviews and a survey of Qiantu’s active user base, we provided our sponsor with recommendations that we determined may be relevant and useful to improving Qiantu’s current credit risk management system