Causality Between Peer-to-Peer Lending and Bank Lending in China: Evidence From a Panel Data Approach

Abstract

This study applied a multivariate panel Granger causality test to examine the causal relationship between peer-to-peer lending (P2PL) and bank lending (BL) in China’s eight major regions for the period from 2014M01 to 2019M12. The empirical results of this paper support evidence for the P2PL leading hypothesis in regions such as Jiangsu and Hubei while the BL leading hypothesis relationship supports the evidence for regions such as Zhejiang and Shanghai. In addition, there is an interactive causal relationship between P2PL and BL in a region such as Shandong. However, the result of a neutrality hypothesis supports three of these eight major regions (Guangdong, Beijing and Sichuan). The findings of this paper provide important policy implications for China’s eight major regions as well as business sectors in the banking industry for understanding and predicting market conditions.

The Impact of Fintech on Economic Growth: Evidence from China

“…The growth of fintech may effectively cut transaction costs and alleviate the problems of information asymmetry because additional complicated jobs such as customer testing, risk assessment, and information sharing are made much easier by fintech. This promotes entrepreneurship [29,39,40], trade [1,41,42], household consumption [27], financial development [23,43,44], financial inclusion [24,45], and household income [24], with these proxies widely documented to contribute to economic growth [38,46,47], thus, we hypothesize: Hypothesis 1 (H1). The impact of fintech on China's economic growth is positive.…”