The Credit Risk Of P2P Lending In Our Country

SME loan is always a big problem in China. SME and individuals operatingconsumption are difficult to get a loan, because SME and individuals lack of collateral,coupledwith lack of credit, which makes it difficult to obtain loans from banks, so demand for fund isstrong. In addition, as China’s economic development, the number of China’s middle class isrising, but the investment channels and financial institutions are few, so the supply of fund isstrong. The "brutal development" of P2P industry is the driving force of China’s financialrepression under the macro background that can not meet the fund need of SME and somepersonal financial.The P2P industry of our country has developed rapidly in recent years, but there arerisks in the course of development, these risks would restrict the development of the industry.This paper explores the borrower credit risk and the credit risk of all P2P platforms using thecase of RenRenDai. Borrower’s credit risk include fraud, cheat,poor credit qualification andcapital purposes risk. RenRenDai lending platform risks include false information of platform,lack of guarantee capacity. The root cause of credit risk is information asymmetry. Lack of credit,low default cost, high borrowing rates and arbitrage are easy to add a personal credit risk. Onlinemode for platform, low threshold, capital pool mode, lack of the guarantee capacity and noRegulation are easy to increase credit risk of P2P platform.This paper makes relevant recommendations to reduce risks that exist in the P2P industry,including self-discipline and discipline.P2P platform should adopt a risk margin regime,guarantee regime, law of large numbers, online and offline business model and publishingplatform information.The government should establish a P2P network lending industryregulatory regime, improve the social credit regime, supervise at the bottom line and theestablish industry standards.