A Study Of The Development Problems In China’s P2P Lending—Based On The Analysis Of "e Zu Bao"

In 2007, the first P2P platform was established in China and during the last 9 years, China’s P2P industry has been showing explosive growth. As of the end of 2015, the number of China’s P2P platforms reached 3690 and the scale of the transaction on the platforms was larger than that of United States. Now, the world’s largest P2P market is in China. But at the same time, the number of platforms with problems also reached 1269, accounting for over 30% of the total platforms. Although P2P is a kind of exotic, but it grows fast in China. Basically, several facts can account for this phenomenon:firstly, China’s long-term financial repression makes a lot of investment and financing needs not being met, especially the financing needs of small business and some customers. Secondly, there is hardly any restrictions in China’s P2P industry. So people who are lacking of financial market experience and firms which have not engaged in finance enter in P2P industry. Finally, the business models of domestic P2P platforms are complicated, and most of them are not working as a single pure information intermediary. In fact, many of our P2P platform raise a lot of money through high rate of return commitments, and then engage in substantive financial operations. They even participate financing of stock market and property market, which is of high risk. Due to the lack of substantive regulatory body and specific operational regulations in P2P lending, the platforms in China are expanding rapidly using the opportunities of regulatory arbitrage.In this paper, we take "e Zu Bao" as our research object and the basic analysis method is case analysis. The basic idea of our paper is to analyze "e Zu Bao" and then find the major development issues in P2P industry. After that, we reference the experience of P2P lending market in UK, and put forward opinions and suggestions for the P2P industry in our country.According to the basic ideas of this paper, the framework to carry out research is as follows:The first part is the introduction. In this section, we explain the background, significance, research methods and main structure of our paper.The second part is the literature review. We review literatures of Chinese and foreign scholars, and point out the similarities and differences of the Chinese and foreign scholars on the focus of the research perspective, research methods and research content. In the last, we expound the research focus of this article.The third part is the analysis of "e Zu Bao" and this is the core part of the essay. In this part, we first review the evolution, organizational structure and backgrounds of top management of "e Zu Bao".Then, we analyzed the A2P model of "e Zu Bao" and clarify the specific operation process. Then, we analyzed product pricing and product promotion for "e Zu Bao".Then we analyzed the main risks of "e Zu Bao" and effectiveness of the risk control measures. These risks include legal risk, credit risk, liquidity risk, regional and systemic risk, information disclosure risk, and technology risk.Finally, we analyzed the regulatory environment of "e Zu Bao". We found no substantive regulatory body is regulating the market behavior of "e Zu Bao", and few specific regulatory rules are applied to "e Zu Bao".The fourth part discusses the problems in the development of the P2P industry in China, which is based on the study of the case of "e Zu Bao". These issues include problems existing in product design and promotion, lack of financial literacy in employees, facing double risks from Internet and traditional financial field, the little disclosure of information, confusions in funds management, lack of supervision, the existence of regulatory arbitrage. This is also the main conclusion of the study.The fifth part is the countermeasure and suggestion part. In this part we learned mature P2P regulation system of UK, and proposed that we need to improve the supervision system, regulate market access and establish information disclosure system, fund trusteeship system and dispute resolution mechanism. Lastly, a self-regulatory organization is also needed for P2P industry in China.The sixth part is the summary of the article. We review the main content and research methods, and pointed out where the article can be improved.