The Online Peer-To-Peer Lending Risk Management Research In China

In the past two years, P2 P online loan has received the widespread attention. P2 P stands for peer-to-peer or person-to-person. As a typical example of the online financial form, P2 P combines internet technology with traditional lending industry. By solving the problem of micro enterprise financing difficulties, attracting capitals and increasing the capital allocation efficiency, P2 P becomes the very significant direction of the future financial industry development. However, due to low entrance requirement, incomplete credit system and the lack of policy, the risks related to P2 P such as credit risk, operational risk and policy raises serious problems. The very serious cases include the platform bankruptcy. So the study of P2 P risk management is of great significance both in theory and in practice.This research is based on the study of the case called Hongling Investment Company 100 million loans overdue. The first section introduces company business overall and the cause and consequence of the 100 million loans overdue. The second section analyzes its credit risk,operational risk and policy risk. It emphasizes on the risks from borrowers, company’s operational risk, large business wrongdoing and legal problems from high loan interest rate. The analysis also studies the lessons from successful P2 P online platforms and banking credit system.By analyzing company’s risk management, it concludes the weakness of lending process, limits of money reserves, lack of the supervision of investors’ money and the necessity of increasing collaterals with increasing loans. The final section gives suggestions on optimizing online and offline risk awareness and measurement, improving the management within the company,establishing the industry’s commission, strengthening information disclosure and supervision.