The Research On Herd Behavior Of P2P Investors In China

Peer-to-peer lending,sometimes abbreviated P2P lending,is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers.It is an emerging financial model with the development of the Internet and private lending which represents the development trend of financial services.As one of the important forms of Internet finance,P2P lending plays an important role on financing for medium-sized and small enterprises,broadening financing channels,developing inclusive financial system and promoting the allocation of resources.P2P lending gains wider attention and support since it arose in China from 2007.It grows rapidly and shows a great vitality in a few years.At the same time,with the development of the industry,the risk begins to expose.Because of the special mechanism of exchange on the Internet and the participants who are mainly individual investors,scholars at home and abroad pay more and more attention on the herd behavior of P2P investors and its influence.This paper first reviews the relevant theories and research on the herd behavior of P2P investors.Based on the previous research achievements,this paper establishes multiple regression model to test the existence of herd behavior of P2P investors in China.The model is from two perspectives:the absolute quantity change and relative quantity change of borrowing subject.This paper uses the data extracted from Ppdai to do the empirical test and groups borrowing subjects according to different risk grades to study the intensity of investors who invest in borrowing subjects with different risk grade.The result shows that the P2P lending investors in China show significant herd behaviors and the investors who invest in low-risk loans show stronger herd behaviors.Based on the above-mentioned result,this paper discusses the reasons of investors'herd behaviors.At the same time,this paper give policy suggestions to the participants of P2P lending,operators of platforms and the government.The suggestions include perfecting information disclosure system,establishing credit reporting system and strengthening the investor protection and education as to avoid the market risk bringing from investors' herd behaviors and promote the healthy development of P2P lending industry.