On Risk Management And Measurements Of Pingan Inclusive Finance Company's Unsecured Loan

Although China's financial system is increasingly diversified,the indirect financing represented by banks still dominates the total.The bank's long-term neglect of inclusive finance has made private sector financing difficult and expensive,except for housing mortgage loans.In 2005,the United Nations called for “inclusive finance” to enable all members of society to have financial services in an comprehensive and effective manner at an affordable cost.Many countries have taken actions and achieved certain results.Under the trend of internet development and "financial disintermediation" in China,internet companies have infiltrated into the financial industry.Traditional financial institutions have defensively set up internet financial services.The competition in the market has promoted the rapid development of inclusive finance.The narrow-minded inclusive finance,that is,the inclusive credit,including internet finance,micro loan,consumer finance,P2P and other sub-sectors,has been exposed to some risks,including the high credit default rate,P2P platform problems and so on during the rapid development.Pingan Inclusive Finance Company,as one of the leading financial companies in China,is an important part of the business of the “Lu.com”.It has the multiple characteristics of traditional finance,internet finance,P2P,micro finance and consumer finance.As an ideal case,Pingan Inclusive Finance Company has high research and practical value.This paper will conduct an empirical case study on this company's business and risk management which is relied on the working experience of Pingan Inclusive Finance Company,combined with relevant public information.This paper focuses on the research on business models,risk management,and risk measurements of Pingan Inclusive Finance Company's unsecured loan,and finds some problems and provides suggestions accordingly: First,in terms of credit approval and postloan management,approval data being too dependent on PBOC credit information while the analysis of soft information being insufficient,high interest rate and its inaccurate match of risk,excessive approval amount,lack of loan usage control,and insufficient post-loan monitoring,are the main problems,which need to be resolved accordingly.Second,in terms of business models,excessive proportion of guaranteed models,insufficient risk isolation,heavily capital reliance,and high sensitivity to policy,are the main problems,it is recommended to increase efforts to develop the unguaranteed model,and use more qualified external guarantee companies and insurance companies.Third,in terms of risk measurements,it is lack of forward-looking and accuracy,the rapid rise of business masks the release of the loss,and there is a large degree of underestimation of the loss rate,it is recommended to review the credit assets quality in view of the possibility of loss,reasonably estimate and prepare for the potential loss rate.In addition,this paper has certain reference significance for regulatory authorities and industry self-regulatory organizations,it calls for the establishment and improvement of a comprehensive national personal credit information system,the introduction of independent regulations and policies for unsecured loans,and the regulation of statistical standard and information disclosure requirements.The innovation of this paper is to describe and analyze the real bad debt and loss data of Pingan Inclusive Finance Company,and quantitatively predict its potential risk level,so as to make up for the lack of data in this research field.