Research On Risk Management Of P2P Network Platforms

In terms of financial institutions such as banks risk management is the basis of their stable development, and it is also vital to the non-financial institutions including small loan companies and guarantee corporations which arise in recent few years. Definitely risk management is key to newly-arising P2P network platforms. As new financial products, these network platforms are not a simple combination of internet and finance, but an innovation that maximizes the former’ s advantages in efficiency and breaks the latter’s unitary model of traditional financial products, however, the dramatic development of P2P network platforms attracts social attentions on their potential high risks.This paper intends to introduce four risks of P2P network platforms and four risk control strategies on basis of research on asymmetric information and the third-party game theory, via which scholars domestic and abroad draw rich conclusions on sources of risks, and on problems in operating P2P Network Platform A. The four risks refer to credit risk, market risk, management risk and technology risk and the four risk control strategies are risk transfer, risk diversification, risk aversion and risk compensation. The operation of P2P Network Platform A indicates that risks emerge from weak internal control, close credit market, indefinitely regulatory responsibility and unqualified staff. Therefore, this paper proposes several measures to solve the above-mentioned problems:to improve internal control system, limit the maximum of a single transaction, enrich risk aversion means, strengthen credit evaluation capacity, build regional patterns and to encourage the industry association to play a full role etc.I have taken part in the whole process of setting up and managing P2P Network Platform A, which enables me to go further research on the same network platforms that are confronted with the similar problems. First of all, I believe that in order to control risks the management should recognize the importance of internal control and establish its system. Besides, the management should improve credit evaluation mechanism, make regulatory responsibility definite and take risk control strategies flexibly so as to reduce credit risk, market risk and management risk.The innovation lies in the following points:first, the research on internet lending platforms is new in academy as it is booming recently; second, this paper is the fruit of my experience in managing P2P Network Platform A, which may provides suggestions for some other P2P network platforms as well; third, this paper focuses more on feasible risk management methods and efficient risk control measures including improvement of internal control system and procedures than those on policies only.