The Research Of Dynamic Credit Risk Assessment Method For P2P Lending

The P2 P lending develops rapidly: the market scale expands rapidly, the number of P2 P lending platforms increases quickly, the total amount of transactions through P2 P lending rises fast and the business structure of P2 P lending is becoming more extensive and complex. But at the same time, the annual quantity of P2 P lending enterprises at fault and the total amount of overdue loans are growing rapidly. How to make the full use of the available information, to predict the P2 P lending credit risk accurately, and to carry out effective control and management of credit risk, has great significant role for the healthy development of China’s P2 P lending.The core of this paper is how to evaluate P2 P lending’s credit risk effectively. Although there are many methods and models of credit risk assessment for banks’ credit risk management, because there are essential differences between the P2 P lending and bank in the legal, regulation, business mode and operation mode, the credit risk assessment methods and models for banks are not applicable for the P2 P lending. In foreign countries, the P2 P lending uses the credit rating information to evaluate the credit risk of borrowers, which helps customers and platforms to manage the risks. Because the static risk assessment methods, such as the credit rating, evaluate the credit risk only based on the history information, the static risk assessment methods can neither measure the credit risk of specific loan projects accurately nor reflect the influences, which are caused by the environmental changes or unexpected events, on the credit risk fully. In China, P2 P lending provides service for different users widely, P2 P lending business is complex, the credit system and complete credit records are lacked, the credit status varies for different regions, the changes of the macro-economic and external environment have a significant impact on the credit risk. The static methods for credit risk assessment could not evaluate the credit risk of the Chinese P2 P lending accurately. In order to find effective method to evaluate the credit risk of Chinese P2 P lending, I adopted methods of comparison research, the induction and deduction research, analyzed the characteristics of Internet finance, analyzed the difference between the static model and dynamic model, analyzed the characteristics of various credit risk assessment model, analyzed the characteristics and the demands of the credit risk assessment for China P2 P lending, and proposed a dynamic P2 P credit risk assessment method based on the analysis results. The research shows that dynamic P2 P credit risk assessment method considers the impact of the enterprise strategy, the external environment and the models’ over-fitting in credit risk evaluation as well as uses periodic evaluation of effectiveness to determine the effective models so that the dynamic P2 P credit risk assessment model could evaluate the credit risk of Chinese P2 P lending.