Effects Of Stock Market Returns On Peer-to-peer (P2P) Lending Market

Online peer-to-peer(P2P)lending is a financing channel based on electronic platforms and electronic commerce credit.Borrowers and lenders can use Internet platforms to achieve transactions by themselves.This channel provides more opportunities for individual borrowers and small enterprises to acquire funds since it is difficult for them to access loans from banks.The trading performance of the P2P lending market will not only be affected by itself,but also by the spillover effect of other financial market.This paper mainly studies the impact of stock market return rate on P2P market trading activity,and examines the correlation between P2P market default rate and stock market return rate,and then provides reasonable suggestions for investors and P2P platform.The impact of stock market yield on the P2P lending market is mainly due to three aspects:the investment substitution effect of the stock market,the investor’s investment motive and the risk transfer of the macroeconomic fundamentals.The investment substitution effect of the stock market means that when the yield of the stock market continues to rise,investors have optimistic expectations for the future of the stock market,and will invest more capital in the stock market,which will lead to low activity in the P2P markets.When the stock market is a "bear market",the stock market’s yield is relatively lower,and investors will invest more money in the P2P markets.Investors’investment motives are divided into speculative motives and risk-averse motives.When stock market yields continue to rise,investors tend to invest in stock markets to obtain capital gain based on speculative opportunities.When stocks fall,investors are based on risk-averse motives to invest in the P2P market to obtain stable interest income.The risk transfer of macroeconomic fundamentals means that the risk increase in the P2P market is the manifestation of macroeconomic risks on the microscopic main body.The stock market is a barometer of the macro economy.When the stock market yield declines,the overall macroeconomic development is also indicated.It tends to slow down or face greater risks.At this time,the macroeconomic risks will also be transmitted to the P2P lending market,resulting in an increased risk of default in the P2P market.The empirical results show that the stock market return rate is negatively correlated with the activity of the P2P network lending market.When the stock market is bullish,investors will transfer funds to the stock market.When the stock market is a bear market,investors will transfer more money to the P2P market.The fluctuation of stock market return will cause substantial capital fluctuations in the P2P lending market.What’s more,there is a significant negative correlation between the stock market yield and the default rate of the P2P market.That is,the default rate of P2P loans that are fully capped when the stock market is bullish will be more than the P2P borrowings in the bear market.Low,which indicates that in the stock market downturn,borrowers who successfully raise funds in the P2P market have higher potential credit risk and higher default risk in the future.Based on the above conclusions,this paper also puts forward reasonable suggestions for investors in the P2P loan market and the P2P network lending platform.When the stock market is in a downturn,investors should not blindly transfer funds into the P2P market.Instead,they should carefully analyze the risks of different borrowing targets on the P2P platform and examine the "hard information" and "soft information"disclosed by the borrowers comprehensively to make reasonable investment decisions.The managers of the P2P platform should pay more attention to the large capital inflow and outflow of the P2P platform when the stock market fluctuates,and control the risks in a timely manner effectively.