Asymmetric Information,Heterogeneity And Default Risk Of Financiers

Information asymmetry can be easily found in financial market,this phenomenon is particularly obvious in online P2P market,and the default risk is high.In recent years,in view of the frequent collapse and fraud of P2P platforms,regulatory authorities have issued a number of policies,involving capital maintenance,information disclosure,filing and other aspects,showing a trend of tighter regulation.Affected by this,the development of P2P industry slowed down,and the number of platforms is sharply decreasing.In order to promote the P2P industry healthy and normative development,it is necessary to strengthen the research on the problem of asymmetric information in the P2P industry and analyzing the default rate and its influencing factors of the financers in P2P platforms.In addition,under the premise of compliance with the requirements of supervision,P2P platforms also actively attract customers and striving to improve the profitability.Therefore,it is necessary to take full account of the heterogeneity of the financiers in the platform,to analyze the differences between different financers' success rate and default.Under this circumstance,the paper uses lending data from P2P platform "Renrendai" from Jan.2011 to Jan.2015 to study the inforarmation asymmetry and default risk of financiers in P2P market with Logit and OlS model.In the study,we selects the optional credit certification number of indicators and the description of the debt two variables as the"signal" to alleviate the information asymmetry,so as to test whether or not the "signals"can improve the success rate of the loan repayment,lower default rates.In addition,it also examines whether the heterogeneity of the investors in the market will lead to the difference between the success rate and the default rate of the borrowers.We find that the description of the debt can alleviate the problem of information asymmetry in P2P market by increasing the probability of success and reducing default rate.Although the number of optional credit certificate indicators can increase the probability of success rate,it cannot have a significant effect on reducing default risk.Then we analyze the effect of the heterogeneity of financier on information asymmetry and find that information asymmetry is heterogeneous.Finally,the paper finds that when the heterogeneity of financier is considered,the effect of the number of optional credit certificate indicators and the description of the debt on probability is different.High-credit financiers can reduce adverse selection and improve success rate by transmitting "signal" while low-credit financiers can also improve success rate but might trigger moral hazard,which means that the default rate of the debt increases.In recent years,defaults in P2P platforms have been more and more frequently.Combine this background and our result,we suggest that P2P platforms must try their best to search financiers' information by using big data or something else and deal with different financier in different way according to their heterogeneity in order to prevent default risk,alleviate information asymmetry and develop the whole industry.When choosing the investment object,it is necessary for investors to consider the reputation of the platform,the quality of the object and the ability to bear the risk of its own.Financiers need to provide detailed information as far as possible to reduce the asymmetry of information and prevent default risk.Besides actively promoting the implementation of various regulatory policies,regulatory authorities also need to strengthen the construction of related infrastructure,such as the establishment of a comprehensive coverage of credit information network.