Research On The Legislative Systems Of Peer-to-peer Lending Platform In China

The idea for Peer-to-Peer (P2P) lending spawned from microcredit principles and hasattracted widespread publicity over the past decade. Generally, microcreditinstitutions utilize small, short-term loans to provide credit access to impoverishedentrepreneurs and others ignored by commercial lenders. P2P is a direct trading formwhich avoids lenders and borrowers rather than traditional loan brokers. To certainextent, it is beneficial to ease the difficulties for loans by small enterprises andpersons, and enrich our Chinese credit market. However, the seemingly convenientand low-cost financing model also contains a number of financial risks. In China, P2Phas been wandering in the vacuum areas of the law and government regulatory. Thereis no clear and definite legal definition for loaners and there is no security protectionfor loan capital. Moreover, the weaknesses in current financial credit risk evaluationmechanism and flaws of risk control system have hindered the healthy developmentof P2P lending. Taking two P2P lending platforms of “Ppdai” and “Creditease” assamples, I analyzed the risks of the site operation and supervision as well ascorresponding suggestions. This paper is divided into three parts. The first chapter presents the basic theories ofP2P lending platform. First of all, it states a reasonable definition and the role given toP2P lending platform. Then in the second aspect, it introduces the history and theoperations procedure of P2P lending platform. Also, it classifies different operatingmodes in accordance with the operation of the "Online" and "line". In the final aspect,on the basis of the native models and cease-and-desist order of U.S. SEC, I considerthat the P2P lending platform belongs to non-financial institution.Chapter two presents the main problems during the operation process and proposessolutions. The first part discusses that the lack of the legitimacy identity of the P2Plending platform, the insecure of the borrowing funds and the inadequate of the riskcontrol and credit rating systems. The second part provides several suggestions forperfection of the network platform, more specifically, including defining the loaner’slegal status, setting up the review procedure for the sources and process of borrowingfunds, making declaration of loan purpose, dynamic tracing the use of loan,establishing risk prevention fund, and completing the personal credit system andcredit rating system.Chapter three in this paper bases on the supervision of the P2P lending platform.Firstly, P2P lending platform in our country needs financial regulation’s supervisionthrough reviewing the historical changes of U.S. SEC’s regulation on P2P lendingplatform. Secondly, there is confusion during the development of native P2P lendingand there is vacant concerning the regulatory body as well as regulatory laws. Last butnot least, the author puts forward sound proposals that defines the financial regulatorybody, issues relevant laws and regulations and establishes self-regulatoryorganization.