Research On The Causes And Impacts Of Prepayment Under P2P Online Lending

Peer-to-peer(P2P)online lending,which has been rapidly developed based on the Internet,enables funds to be directly allocated between lenders and borrowers.Compared with traditional financial institutions,it has incomparable advantages such as lower thresholds,simpler procedures,and higher inclusiveness.At present,the research on P2 P lending is more concerned about exploring the factors affecting the default rate and predicting possible defaults,and how to optimize the credit system to improve the credit evaluation of borrowers,thereby reducing the probability of default on an order,but often ignores the impact of the borrower's choice of prepayment when the actual repayment is made.In actual transactions,prepayment is a more common situation than default,which causes the lender to lose the proceeds of the original order,and subsequent reinvestment will also affect the overall investment income.Therefore,from an individual perspective,researching prepayments can help optimize lenders' portfolios,achieve higher returns,and provide some assistance for lenders' bids;from the P2 P lending platform perspective,researching prepayments can make the platform predict the borrower's prepayment probability,help platforms to design more suitable structured investment product,and provide better services for the P2 P lending market.Therefore,this paper conducts two researches on prepayment of the P2 P online lending platform:First,how does prepayment affect the lender's actual investment income?Second,which factors lead the borrower to choose to repay in advance?In view of the first question,this paper draws on MBS prepayment research and previous scholars' research on prepayment of P2 P platform,considering the case of lenders reinvesting in prepayment orders.Based on the rational person hypothesis and EU theory,this paper constructs the actual investment income model of the lender in the case of prepayment,and constructs the corresponding data analysis based on the Renrendai platform.It was found that the data analysis is consistent with the theoretical model derivation:First,The lender's investment income is mainly affected by the probability ? of prepayment of the order,the time T of prepayment and the time F spent by the lender to re-find the investment order;Second,the earlier the loan repayment occurs in advance,the more the loaner loses the investment income during the n period;Third,lenders who have experienced early repayments,after using the platform automatic bidding tools,the re-investment search time is greatly shortened,so that the actual investment income is higher than the unused;whether or not the automatic bidding tools have been used,the actual investment income of the lender who has experienced prepayment is higher than those who has not experienced the prepayment.Forth,for the P2 P platform with automatic bidding mechanism,if the lender encounters the loan order with prepayment within the expected investment period and uses the automatic bidding tool to re-invest the order of the same quality until n period,the investment income these lenders obtained will be higher than those who never encounter the loan order with prepayment.Fifth,as for the P2 P platform which will compensate the lender for the early repayment,then if the lender encounters the early repayment,and the re-finding time is less than or equal to one month,this part of the fine will make up for the loss during this time,so that the actual investment income of the lender within the expected investment period is even higher.In view of the second question,this paper takes the order information and the borrower information as the main influencing factors.The Logistic model is used to empirically analyze the factors affecting prepayment,and the empirical results are tested and predicted.The model as a whole is significant and fitted,and the following conclusions are drawn:First,the better education and the longer the working life,means that borrowers have stronger ability to acquire wealth and have sufficient funds to pay the principal and interest of the loan.At the same time,if the platform recognizes the borrower's income and credit status,they will also likely to choose to repay in advance.Second,the reason for prepayment is also reflected in the loan order information.The larger the loan amount of the order and the longer the borrowing period,the borrower is willing to repay the loan when it is capable;the lower the interest rate of the loan means the lighter the debt,the borrower is likely to choose prepayment,and the impact of interest rate on prepayment is more significant.This paper has certain innovations in research perspective,research content,research methods and research conclusions.Specifically,this paper considers the lenders' reinvestment of P2 P platform after encountering prepayment.Based on the EU theory,this paper attempts to construct an investment return model with early repayment.In addition,for the first time,the domestic P2 P platform data is used to make a specific data analysis of the investment income theory model.It is considered that the prepayment in P2 P lending is not a bad thing.This conclusion is different from the previous scholars' conclusions,while they regard prepayment as a risk.At the same time,this paper also uses the Logistic model to explore the factors affecting prepayment in the domestic P2 P platform for the first time.However,due to the limitations of personal knowledge,and the limited data of current research,more data is needed in the future to verify and supplement the theoretical model of actual investment returns under P2 P lending prepayment,and how to build a better prepayment forecasting model is important in the future.