A Study Of The Borrower's Credit Risk Of The Online P2P Lending Based On The Spread

Since the establishment of the first P2P online lending platform in Shanghai in 2007,the number of China's P2P online lending platforms has maintained a rapid growth trend.Behind the brutal growth of the P2P online lending platforms,the borrower's defaults are more common,which gives credit risk to the investors and the platform.High borrower's credit risk will not only damage the interests of investors,but also make investors bear the risk and the benefits that do not match with each other.Besides,it will damage the reputation of P2P online lending platform.Based on Logit and Tobit models,and by using transaction data from January 1st 2011 to September 30th 2015 on Renrendai.Com,this paper tries to investigate the spread that is a part of interest rate that contains asymmetric information between the borrowers and the investors,and explore the spread and other factors on the impact of credit risk,and do further research on the reason why borrowers are willing to increase the cost of borrowing money through theoretical study and empirical study.Firstly,this paper introduces the theoretical basis of the credit risk of borrowers on P2P online lending from the aspects of credit risk theory and information asymmetry theory.Secondly,this paper uses excel VBA data mining technology to capture transaction data on Renrendai.com,and uses the OLS method to calculate the spread(the part of interest rate that contains asymmetric information of the borrowers and the investors).After that,this paper explores the respective impact on the borrower's credit risk from spread,the subject of the loan list,the basic information of the borrower,the borrower's financial situation and macro factors,and then study the causes of the spread.Lastly,through the above analysis and research of P2P online lending in China,this paper puts forward he governmental suggestions for government regulators,P2P industry,P2P platforms and investors to prevent credit risk for P2P platforms.It is found that the spread is positively related to the borrower's credit risk under the floating mechanism of interest rate determining.The greater the spread,the higher the probability of the borrower default.The control variables are set from the subject of the loan list,the borrower's basic information,the borrower's financial situation and the macro factors.Most of the variables can reflect the credit risk to a certain extent and are consistent with the expectation.This paper further explores the reasons why the borrowers are willing to increase the cost of borrowing money,finding spreads are relevant to the borrower ' s degree of urgency to obtain the borrowing money.Specifically,the spread is inversely correlated with the time required for the completion of a list,which means the greater the spread,the shorter the time required for the completion of a listThrough the study of this paper,we found that the loan interest rate of P2P network loan does not correspond well with the borrower's default risk,and the borrowing interest rate determination method lacks the rationality.By learning from the development status and experience of foreign P2P online lending industry,this paper carries on the empirical analysis to study the credit risk of the P2P online borrower based on the spread,proposing suggestions to promote interest rate determining mechanism of China's P2P online lending platform and effective management of credit risk.