Could Investors Be Protected From Risk Reserve Fund On P2P Platform?

Under the background of the rapid development of financial innovation,Internet finance has greatly promoted the development of inclusive finance.However,its risk gradually deviated from its inclusiveness.For example,in the P2P industry,the rate of closure and problem platforms is as high as 67%,many of which even have credit endorsement of state-owned,listed companies or venture capitalists.And now,many P2P platform establish the risk reserve fund to promise investors principal and interest,and have made great social harm by inducing the large amount of funds into the Ponzi scheme.Therefore,starting from the institutional risk control capability,this paper studies how the Internet financial platform,such as the P2P platform,establishes the risk reserve fund under different risks,which is beneficial to the protection of the interests of investors and the maintenance of financial stability.Furthermore,the conditions for the sustainable operation of such innovative financial platforms under the risk reserve system are investigated,to provide evidence for the identification of Ponzi schemes and illegal fund-raising.Meanwhile,we used over nine hundred thousand loans' information on one of P2P platform named renrendai to analyze the influencing factors of providing risk reserve.And we used nearly three thousand platforms' information in P2P industry to analyze difference between the normal platform and the broken platform,providing the condition for the platform to come up with risk reserve fund.In this way,we can confirm the theoretic results well and provide some advice for investors to make decision.We combine the bank run model which was claimed by Diamond and Dybvig in 1983 with the information asymmetry in Fintech,and we also use some data analysis methods like Logit model to figure out the condition of how risk reserve fund can really protect investors from both theoretic and empirical views.We found that,(1)in the case of small risk,establishing risk reserve fund is to prevent a bank run,an important means to protect the investors,to maintain financial stability.In the case of greater risk,the risk reserve fund often becomes a Ponzi scheme inducing investors.Once the bankruptcy happens,it will greatly damage the interests of investors,causing great harm to society.(2)The project with higher credit rating,lower annual interest rate,higher borrowing amount and longer loan term are more likely to obtain risk reserve.(3)Platforms which usually provide subject with short time and high rates as well or with smaller registered capital or information missing are riskier.Risk reserve fund often becomes a barrier to information transfer between borrowers and borrowers,exacerbating information asymmetric and causing huge losses to investors.(4)When the platform does not provide risk reserve fund,investors need to improve their ability to identify real profit subject.In addition to relying on the credit rating system provided by the platform,it is also necessary to investigate other information and authenticity of borrowers to achieve the expected revenue.Therefore,it is necessary to confirm the risk of the project in accordance with the relevant projects to allow the establishment of risk reserve fund to protect the effectiveness of the market.In addition,inclusive finance does not mean that all the people to participate in,an investor needs to improve their professional accomplishment to better participate in financial activities,maintaining financial security and stability.Therefore,the risk reserve system should be abolished in the higher risk net loan platform and these platform should be infomediary.