An Empirical Analysis Of The Factors Influencing The Interest Rate Of P2P Lending Market In China

As one of many Internet Financial formats,P2P Lending has played a complementary role in meeting the needs of individuals and micro businesses.It also plays an increasingly important role in improving the utilization rate of idle funds and enriching the investment channels of residents.The monthly turnover of P2P Lending has increased by nearly 20 times since 2014,attracting more and more people to participate in it.The interest rate of P2P Lending is the focus that borrowers and investors pay most attention to as the embodiment of the capital price in the P2P market.For economic researchers,P2P Lending interest rate is regarded as a market oriented interest rate.Whether its relationship with traditional financial market interest rate or its particularity in the new lending environment,it is worth studying.Through literature review,we find that many literatures have studied the interest rate from micro platform,and studied less interest rate from macro-perspective,studied more short-term volatility and less long-term influence factors.According to the data,the interest rate of P2P Lending is gradually reduced from about 20%in early 2014 to about 9%of today.Therefore,this paper tries to study the long and short term influence factors of the interest rate of P2P Lending market from the macro-perspective.In this paper,the development,supervision and current situation of P2P Lending interest rate are arranged and expounded in order to have a more profound understanding of the P2P Lending market and interest rate in China.On this basis,combined with the formation mechanism of interest rate in China's P2P Lending market,and referring to the traditional interest rate decision theory,the private lending interest rate decision model and the specific status of China's P2P Lending market,the possible factors affecting the interest rate of China's P2P Lending market are analyzed.This article from the private lending market factor,the formal financial market factor,the capital supply and demand factor and the market structure factor,choosing the bond interest rate,private lending interest rate,the ratio of the number of the investment to the number of the loans,the ratio of the number of banks and state-owned background platform to the operating platform number as explanatory variables,by establishing cointegration relationship and the VECM model to study the influence of these variables on China's P2P Lending market interest rate and the possible reasons behind them.The results show that:in the long run,P2P Lending interest rate is positively influenced by the yields of treasury bond and private lending rate,and negatively related to the proportion of investors and borrowers and the proportion of bank and state-owned assets background platform.P2P Lending market as a part of the whole financial system,although the borrowers are different from the formal finance,but still under the impact of the macroeconomic environment.P2P Lending interest rate change direction is consistent with the risk-free interest rate on the formal financial market;the basic attributes of P2P Lending with private finance,so the P2P Lending interest rate influenced by private lending environment and consists with the change of the interest rate of private lending;the change in the ratio of investors to the borrower brings changes in the supply and demand relationship and then affects the interest rate;banks and state-owned background platforms due to the asset side source and risk control ability,their increase in the proportion of number of the market will reduce the interest rate,and then reduce the risk of the market.In the short term,the changes in the interest rate of P2P Lending are mainly influenced by the interest rate of the earlier period of private lending and the change of the ratio of the number of investors and borrowers.Private lending rate changes will transfer to the P2P Lending market,causing the P2P Lending market interest rate changes in the same direction;there is a close interaction between the interest rate of P2P Lending and the relationship between supply and demand,when the supply is oversupplied,the interest rate currently or in the short term falls,which is counteracted on the supply and demand relationship,and then shows the rise of interest rate after 2-3 periods.At the same time,we find that the P2P Lending market is independent from the formal financial market in the short-term,and the change of market structure can't affect interest rate change in a time.The long-term equilibrium is relatively limited to short-term direction adjustment.The P2P Lending market of our country is still in the growth period,and the corresponding transmission and adjustment mechanism in the short term is not enough and effective.On this basis,combined with some specific situations of P2P Lending market in our country,we put forward some corresponding policy recommendations,hoping that China's P2P Lending market will get better development.