Research In The Business Model, Influencing Factors And Risk Management Of Internet-based P2P Lending

The term of internet finance comes into public attention when traditional financial system cannot meet the need of credit. When the scale of internet finance is increasing and innovation is improving, the risk within it is accumulating as well. However its regulation is not yet mature to publish, thus it is extremely important to analyse the influence factors and risk management to further alleviate this problem. Currently, due to the reformation of interest rate liberalization, traditional financial institutions are being confronted with several problems such as heavy debt, high loan-deposit ratio and strict capital regulation etc., their development space is very limited. At the same time, P2P which based on internet finance is growing up quickly with its intrinsic value. The scale of P2P expands fast for these above two reasons. The role of P2P for improving financial system is important, while the risk within it cannot be ignored. As the booming development of internet, people are becoming more and more familiar with and eager to chase new financial products. Medium-sized and small enterprises which are excluded by tranditional finance institutions will be promoted well, financial products can be improved and common investors can be offered with better service only if P2P is under control. So the risk management for P2P is a brand new research topic, which means we need to refer to foreign experience and also research it under Chinese background.Domestic scholars have researched this field so far and gain some achievements. Based on their conclusion, this paper starts its research from the influence factors of volume and yield rate and finds out the key factors. Then it digs out the risk points and emphasizes its origin, development and possible effect. Since supervision for internet finance in China is just started, most innovated financial products cannot be regulated as traditional products. This paper focuses on analysis and control of P2P risk and proposes regulation suggestions. Researching steps are as followed:First of all, this paper studies the origin, business model and risk regulation of P2P. It summaries basic characteristics of P2P in China, sets a researching goal for influence factor of risk management and prepares cases and theories for further analysis.Secondly, volumn and yield rate are the two key indexes for P2P. Volumn stands for the attitude of investors and yield rate represents its attraction and stability.We can study P2P from the effect of various influence factors on these two indexes and get to know which factor has bigger influence and which one will cause bigger votatility.Thirdly, this paper discusses the main business models of P2P, classifies risk further and considers the harmful effect when the risk break out and how to avoid it at last. We calculate the effect of credit risk, operation risk, market risk and risk prevention by quantitative analysis, thus we can know the potential biggest risk point.Fourthly, this paper proposes several regulation suggestions based on analysis above. Regulation of P2P can be started from risk prevention system and specific method. Potential risk of P2P can be avoided within internal financial system by proper supervision.In summary, Starting from the analysis of intrinsic characteristics of P2P and taking advantage of ten years working experience in financial institution of author, this paper discusses the influence factors and theories of risk management. Regulators need to gradually improve current regulation system to adjust irrational profit impulse of various financial institutions. There are two points need to be stressed:One is optimizing the risk regulation system of internet finance to set up a proper one to in line with the new trend; the other is an innovative business model is needed to control the risk of P2P. The future of P2P is the spirit of internet&finance which will be accepted by more and more people. However, any innovation of financial products needs to be under proper control rather than simply copy foreign practice. When the risk of internet finance is managed and regulated well, financial risk will be minimized and the risk spreading channel will be cut to protect entity economy. Only in this way can we have financial innovation to service the development of economy and society better.