The Risk Control Research Of Peer To Peer Lending In China

Traditional financial industry has not fully meet the diversity demand of investment and financing, leading to the imbalance between supply and demand of credit market, which create a new form of financial industry,Peer to Peer Lending.As a kind of financial innovation, Peer to Peer Lending addsvitality and diversity of credit market, relieves the small business and personal loan difficult problem.It is a financial mode of information transfer and dealmakers using the electronic commerce network platform, different from commercial Banks, small loan companies, mutual help association, and illegal private bank. It is a kind of analogous financial institutions engaged in financial and management service, which play an important role in promoting the folk financial market activity, improving the utilization rate of idle funds and easing the financial difficulties oflow-income people.As a new thing, Peer to Peer Lending has risk in both legal background and operating system. In this paper, based on the definition and characteristics of Peer to Peer Lending, we distinguish the similarities and differences with other financial forms which are easily confused.Through sum up, domestic Peer to Peer Lendingcould be divided into three kinds of operation mode: information intermediary platform model, small loan company online mode and creditor’s rights transfer mode.Based on the analysis of Peer to Peer Lending development situation at home and abroad, we find that its transaction size is much less than the shadow banking. Analysis and guard against its risk is necessary, because the Peer to Peer Lending platform is more or less in the same or similar business with shadow Banks.Furthermore, we analyze the potential risks of Peer to Peer Lending,and put forward the current period need urgently to solve four big risks: High Borrowing Cost Risk; Legal Compliance Risk; Platform Operation Risk; Regulatory Risk.Finally, we have put forward the risk prevention strategy: signal transmission to decrease financing cost; improving the law system of Peer to Peer Lending; strengthening Operating mechanism construction of Peer to Peer Lending; and establishing and perfecting the regulatory system of Peer to Peer Lending.Our research canprovide some decision reference for regulatory authorities and Participants, guide the financial innovation gradually to standardization development.