Research On Risk Rating System Of P2P Lending In China

The P2P is an abbreviation of "peer to peer lending", which means the network lending, it is a financial model that allows individuals providing micro credit through online trading platform to other persons, and it developed rapidly in recent years. According to incomplete statistics, there were total 1843 P2P lending companies in China until December 2014 which is explosive growth of number that compared with 33 companies in April 2012.The main risk of P2P lending in China is the credit risk, but the P2P network risk management technology in China is backward. The risk assessment is only in the simple imitation stage of the method about traditional credit risk assessment, which could not meet the requirements of P2P security that demanded by participants in the transaction, and there is no rating system for investors, borrowers, and network lending platform. Therefore, it is urgent to establish a scientific and effective credit risk rating system for P2P lending in China.This paper elaborates the research of P2P rating system of credit risk in our country through four aspects. Firstly, this paper analyzes and summed the network lending operation mechanism and risk characteristics and risk factors and causes of P2P lending in China. Secondly, analysis of the current situation about P2P risk rating and compare with the traditional credit rating in our country, find out where we can learn, and points out the defects of P2P risk rating. Thirdly, establish P2P rating system from three parts which are borrowers, investors, and network lending platform. Finally, we estimate the P2P lending risk in China with our rating system.