Research On The Legal Control Mechanisms Of The Network Lending Transaction

In recent years, after the establishment of China’s first network lending platform-Pat Credit in Shanghai in the year of2007, transactions on the network lendingplatform in our country becoming more and more popular, getting increasing favorfrom individual industrial and commercial households, small/micro business ownersand other market economic entities.As a new way of financial services, thedevelopment of network lending platform and transaction, eases the issues of “lendingdifficult” between individuals, small/micro enterprises and traditional financialinstitutions, provides an available solution to this problem.There’s no doubt that, inthe long run, the network lending platform, which possesses the characteristics ofinclusive finance, will be conducive to the development of the credit market. However,due to the time of its development is not long, the relevant legal system is not perfect,economic and administrative policies are not fully supporting, there have been manyproblems when network lending platform and transactions in their practice.Associatedwith the development of network lending platform, the transactions risks due to theoverdue, the systemic risks towards financial system due to the widespreadtransactions risks, the operational risks generated from personnel, technology andprocedures, the violation risks produced by illegal fund-raising, illegal deposits fromthe public and other illegal violations are constantly upgrading, seriously affected thenormal development of financial industry.In order to effectively eliminate thenegative impacts of network borrowing trading platform, maintain networktransaction order, keep the financial system secure and stable, and fight against thevarious criminal behaviors on the network lending platform, network lending platformand transaction risk control legal regime should be constructed from three aspects:prevention mechanisms, regulatory mechanisms and remedies mechanisms to ensurethat the network lending platform and transactions operate properly and orderly.There are four parts in this paper.The first part outlined lending platform lending transactions network model. First,started with network lending platform lending transactions, the concept of networklending platform lending transactions, characteristics and reasons for the formationwere explored. Then the lending platform lending transactions network mode wasinvestigated. Took the direct lending mode and debt trading mode as examples, the legal relationships between the network lending platform lending transactions weredescribed.In the second part, types and their causes of the loan transaction risk on lendingplatform network were analyzed. Firstly, the definition and characteristics of thenetwork lending platform lending transaction risks were discussed. Secondly, the typeof lending transactions risks on network lending platform explored, summarized fourkinds of risks: the transaction risk, operational risk, systemic risk and compliance risk.Last, the causes of lending transaction risks on network lending platform wereanalyzed.In the third part, lending transaction risk control status and legal mechanisms onnetwork lending platform were commented. First, the existing legal systems oflending transaction risk control on network lending platform were investigated frompreventive mechanisms, regulatory mechanisms and relief mechanisms.The fourth part of the thesis concentrated on the construction of lendingtransaction risk control legal system on network lending platform. First, starting fromprevention mechanism, we proposed to increase the threshold for participation inlending transactions and improve its exit mechanism, establish credit risk evaluationsystem. Second, in the view of regulatory mechanism, control risk by establishingprinciples clearly subject, setting norms and setting responsibilities. Finally, remedymechanism on risk control was proposed.