Government Affiliation and Peer-To-Peer Lending Platforms in China

Jiang, Jinglin; Liao, Lizi; Wang, Zhengwei; Zhang, Xiaoyan

doi:10.1016/j.jempfin.2021.02.004

Cited by 42 publications

(21 citation statements)

References 26 publications

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“…Political connection data are only available for a subsample of platforms, and the failures among platforms with political connections only account for a small proportion of the total record. Consistent with the findings of Jiang et al (2019), platforms affiliated with government have higher survival probabilities, indicating that government involvement can increase a platform's creditworthiness. 26 The regression results are presented in Panel B of Table 5.…”

Section: The Influence Of Political Connectionssupporting

confidence: 75%

“…show that platforms with higher creditworthiness attract more lenders and perform better. Jiang et al (2019) find that platforms advertise prominently on their websites that they have the government's blessing, indicating that the government has permitted the opening of this particular P2P platform in some sort of endorsement of their creditworthiness. In such case, platforms have a heightened incentive to disclose the government experience of their executives, as well as certify their values to potential customers.…”

Section: The Influence Of Political Connectionsmentioning

confidence: 99%

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The Failure of Chinese Peer-to-Peer Lending Platforms: Finance and Politics

Li²

2020

SSRN Journal

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We investigate the influence of financial and political factors on peer-to-peer (P2P) platform failures in China's online lending market. Using a competing risk model for platform survival, we show that large platforms, platforms with listed firms as large shareholders, and platforms with better information disclosure were less likely to go bankrupt or run off (platform owners abscond with investor funds). More importantly, failing platforms were much less likely to run off in advance of major political events, but more likely to declare bankruptcy or run off after such events. These effects are more pronounced for politically connected platforms, platforms operating in provinces where local officials have close ties with central government, and in provinces with better local financial conditions. Our study highlights the role of political incentives on government regulatory intervention in platform failures.

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Section: The Influence Of Political Connectionssupporting

confidence: 75%

Section: The Influence Of Political Connectionsmentioning

confidence: 99%

The Failure of Chinese Peer-to-Peer Lending Platforms: Finance and Politics

Li²

2020

SSRN Journal

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“…Online peer-to-peer lending, a technology-based informal finance form, attracts many potential borrowers and individual lenders. The Chinese peer-to-peer lending market enjoyed rapid growth and became an essential financial industry component during 2008 and 2018 (Jiang, Liao, Wang, & Zhang, 2021). And the total trading volume of online peer-to-peer lending corresponds to about 20% of traditional banks' consumption loans in 2018 in China (Braggion, Manconi, & Zhu, 2018).…”

Section: Introductionmentioning

confidence: 99%

Strategic co-funding in informal finance market: evidence from China

Zhang

2021

Journal of Applied Economics

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Information asymmetry in the anonymous informal finance market drives the lenders to screen the borrowers by disclosed information. Using data from a powerful online peer-to-peer lending platform, we study the effects of formal financing records on successful funding and default outcomes in the informal finance market. We find that lenders are more likely to fund borrowers with formal financing records. Borrowers with formal credit are more likely to repay the loans entirely. Co-funding with the formal financial sector is strategic, corresponding to lower default risk. Moreover, without historical success records or with a low-income level, borrowers can use the formal credit signals to mitigate information asymmetry and improve the funding probability. These results are obtained after controlling for loan-level and borrower-level information, cityby-year-month, and day-of-week fixed effects. Several tests show our findings are unlikely to be an unintentional byproduct of the formal financial signals.

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“…Lending or P2P lending in fintech offers a new investment channel. P2P lending provides an alternative but important funding or investment channel that can improve the welfare of borrowers and lenders (Jiang, Liao, Wang, & Zhang, 2021). P2P lending is online micro-financing that lenders and borrowers meet virtually for loan transactions.…”

Section: Introductionmentioning

confidence: 99%

“…The obtained interest rate from lending is usually decided by several considerations and the environment that underlies the borrowers and lenders. P2P lending provides an alternative but important funding or investment channel, which has the potential to improve the welfare of borrowers and lenders (Jiang et al, 2021). This platform does not bear credit risk from loans.…”

Section: Introductionmentioning

confidence: 99%

Factors and Benefits that Affect Lender's Interest in Giving Loans in Peer to Peer (P2P) Lending Platform

Dharmastuti

Laurentxius

2021

Binus Business Review

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Financial technology (fintech) is a combination of the financial industry and technology. One of the uses of fintech is the Peer to Peer (P2P) lending platform, which is a funding channel. This platform is an investment alternative that can increase borrowers' and investors' prosperity. However, P2P also has a high risk that must be considered. Lenders or investors must conduct a loan application feasibility study before giving a loan. The research examined the impact of Character, Capital, Capacity, Collateral (4C) and the benefits that lenders received, as well as the benefits of fintech on lenders' interest in placing their funds on the P2P lending platform. Data were obtained from questionnaires distributed to P2P lending users. The sampling technique was purposive sampling. The total number of respondents who returned the questionnaire was 70 respondents. However, only 53 data could be used in the research. Then, the data were analyzed using Moderated Regression Analysis (MRA). The results show that the 4C factors do not significantly affect the lenders' interest in giving loans. Meanwhile, the benefits and fintech have a significant direct impact. Fintech cannot act as a moderator variable in this model. P2P companies must provide complete information and credit analysis regarding borrowers' conditions to reduce lenders' potential risk.

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Government Affiliation and Peer-To-Peer Lending Platforms in China

Cited by 42 publications

References 26 publications

The Failure of Chinese Peer-to-Peer Lending Platforms: Finance and Politics

The Failure of Chinese Peer-to-Peer Lending Platforms: Finance and Politics

Strategic co-funding in informal finance market: evidence from China

Factors and Benefits that Affect Lender's Interest in Giving Loans in Peer to Peer (P2P) Lending Platform

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