The Risks Of Chinese Peer-To-Peer Lending Platform And Its Supervision

In recent years, the online Peer-to-Peer (P2P) lending with its obvious advantages is developing rapidly in China. The P2P platform works as an intermediary which provides the capital supply and demand information for borrowers and investors. It help to solve the problem of domestic microfinance. Meanwhile, some drawbacks also emerge in the process of rapid development of P2P industry. The risks in the popular debt transfer mode, guarantee mode and small credit mode reveal that frequent innovation in the business mode in P2P industry has already led to a deviation from the core value of P2P. Some P2P lending platforms not only changed their role as providing services without participating in transaction, but also promised investors high returns. The illegal fund-raising and financial fraud acts in the platform operation have touched the regulatory red line. Yet the P2P platform is still out of the supervision category. Protecting the interests of investors, encouraging financial innovation and preventing excessive negative externalities of P2P industry shall be the focus of regulators.This paper includes five parts.The first part is an outline of P2P lending by introducing the meaning, development and the characteristics of P2P lending. The P2P lending is a product of financial innovation. It is originated in Britain and grown in the United States. It prompts the interests of wide range of groups and makes the transaction flexible and efficient with high-yield and high-risk coexisting.In the second part, the author compares several typical P2P lending platforms, such as Zopa in Britain, Lending Club and Prosper in the United States and PPDAI, YIREN DAI, Lufax and Youli Platform in China, and analyses the operations of these four main modes. The legal relationship among the P2P lending in each model and possible reasons behind the difference in operation mode in China and other countries are also discussed in this part.In the third part, the author analyzes the major type of risks in P2P lending platform in China and makes further discussion regarding the specific risks under the P2P platforms with different businesses mode mentioned in the Second Part.In the fourth part, by describing the regulatory methods in the UK and US, China is currently no clear regulations for P2P lending and regulatory authorities; the core strength of the United States is regulated SEC (Securities and Exchange Commission); English P2P lending industry in the early days rely on self-discipline Convention industry Association, the latter by industry associations and government regulation of double standards.In the fifth part,by drawing on the birthplace of the Anglo-American countries P2P lending regulatory model for the regulation of P2P lending platform from the clear legal position and market access platform to build a multi-level monitoring system, improve the regulatory approach, breaking the credit problems in four areas proposed perfect proposal.