Analysis On Overdue Behavior Of Domestic Online P2P Lending And How To Build Social Networks

Online P2P lending (Peer to Peer Lending) is a web-based lending between the individual and the individual. Unlike traditional finance, Online P2P lending’s entire lending process is achieved through the network, which is an important part of the Internet Finance. Online P2P lending platform is a financial services website that combining P2P lending with online lending. Domestic Online P2P lending platforms blossom, and flourish since foreign online lending platform models were brought into China in 2007. They provide a broader way for the individual and SMEs on lending money, and make an important contribution to their development. However, It is always followed by many problems and bombs behind the prosperity. The domestic online P2P lending has the problem of high borrowing costs, high overdue rate and so on, because its development is not mature enough, and it lacks of legal regulation.I have done a lot of reviews, the literature are focused on Online P2P lending risk management and legal supervision, building domestic credit evaluation system, and user behavior research. The first two studies addressed the lack of the legal supervision and shortcomings of the present credit evaluation system, and put forward many proposals and effective measures. The research about user behavior is focused on the success rate of borrowing, but not so much on the behavior of overdue.In this paper, we do the empirical research based on the data from PPDai. First, we analyze the behavior of overdue theoretically, and divide it into two parts-active overdue and passive overdue. Next, we do the research from four aspects of the characters of the overdue behavior. They are personal credit, personal circumstances, subject characteristics and social capital. It was found that gender, APR, and loan term have a positive correlation with the rate of overdue, and the lending credit, work, academic qualifications, loan purpose, bid recording have a negative correlation with the rate of overdue. But the work and purpose of the loan impact the rate of overdue weakly.According to the research, we find that the domestic online P2P lending platforms including PPDai didn’t build social network so well, which led to the partial loss of credit evaluation system. To solve this issue, we propose some viable and effective measures, which including four steps:building different groups, showing links while recording data, creating a security team and activing the community. These four steps are interlocked, aimed at building a complete social network. If the social network on the online P2P lending platforms was built successfully, it would lower borrowing costs, reduce overdue rate, help sound credit evaluation system, and promote the healthy development of online P2P lending platforms.