Research On P2P Platform Mechanism Design From Social Network Perspective

2013is China’s first year of Internet banking.The third-party payment platform, crowdfunding, P2P lending platforms and other network-based online financial services emerged. The object of this study is to select the nowadays popular P2P (Peer-to-peer) network lending model, although there are frequent risks at present. Beyond the traditional financial model, P2P network lending platform meet a portion of the investment and financing needs. Through the platform, a lot of unsecured financing, for example, the small and micro business owners, farmers, poor students, and many start-up team needing venture capital, which through traditional channels is impossible to be qualified to get money, can get money with credit. At the same time, some lenders do have surplus funds can also get benefits through ths investment channels than traditional investment channels. The yield can reach more than10%or even15%. Because P2P network lending platform has a more fast, convenient, simple and quick advantage than traditional financial channels, to a certain extent, it solves the demand and supply of funds dispersed docking difficult problem.Whether traditional or internet banking finance industry, the core issue is information asymmetry which comes from both borrowers and lenders. But the lack of integral domestic credit system and "hard information", like guaranty, is a big problem for the small and micro finance. The major issue to be addressed in this article is that in what way instead of the credit system to reduce the asymmetric information of online P2P lending.By studying the world’s largest P2P online lending platform Prosper.com, I found the mechanism design of it includes grouping, friends bidding, recommendation and other related links. So I make assumptions that under the background of information missing, P2P online lending platform can make full use of private information and personal experience of trust network to solve the problem of the lack of credit on the platform.The basic ideas of the article are: first of all, analyzing the current operation status of P2P loan market, including different platforms at home and abroad, which is the foundation and starting point behind the theoretical and empirical research model; Secondly, studying the academic literature of the field of P2P online lending platform, while the social network for literature were also studied and analyzed; Because there is little social literature applied to social network on online platform, I started from the basic research literature and analysied the social network used on the P2P platforms. I built a model of joint responsibility of the two units, and the results of the theoretical model answered the problem which was put forward in the beginning of the article. The model concluded that, if potential borrowers establish the group, form the social networks among network members and are severally liable with each other, loan costs of P2P online platforms are reduced, and both sides of borrowing and lending benefits are improved. Finally, I chose all the transaction datas between2006and2014of Prosper.com as the sample. With these datas, I established the empirical model of the trust network, the result of which is the different loan risks can be screened by social network signals and social networks can significantly affect the borrowers’default rate.The conclusion of the article is confirming that the social network is an important signal for the P2P online lending platform, which is significant information for investors and can reduce the problem of information asymmetry significantly. P2P online lending is just beginning in China. Currently the top priority is regulating the development of P2P platforms, reducing risk, reducing foot and default.At the moment, we should give full play to the advantage of social networks and keep up with the trend of Internet financial development to promote China’s economic development.Innovation of this paper is to study the effectiveness of the overall P2P platforms, not just from the financial perspective of reducing the lenders’ risk, which can bring great significance to the innovation of our current business.