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Risks of P2P Lending Platforms in China: Modeling Failure Using a Cox Hazard Model

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  • Jianjun Li
  • Sara Hsu
  • Zhang Chen
  • Yang Chen

Abstract

P2P lending platforms in China have risen since 2006 but have already experienced problems with fraud and liquidity. In this article, we describe the P2P lending platforms and their associated risks, and discuss and analyze a dataset on failed and nonfailed P2P companies. We find that an increase in the registered capital results in a decrease in the hazard ratio, while an increase in the interest rate results in an increase in the hazard ratio. We discuss policy implications for the P2P lending sector, which can help to reduce risk in the sector while allowing innovation to arise.

Suggested Citation

  • Jianjun Li & Sara Hsu & Zhang Chen & Yang Chen, 2016. "Risks of P2P Lending Platforms in China: Modeling Failure Using a Cox Hazard Model," Chinese Economy, Taylor & Francis Journals, vol. 49(3), pages 161-172, May.
    • Handle: RePEc:mes:chinec:v:49:y:2016:i:3:p:161-172
    DOI: 10.1080/10971475.2016.1159904
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    Cited by:

    1. Zhao Wang & Cuiqing Jiang & Huimin Zhao, 2022. "Know Where to Invest: Platform Risk Evaluation in Online Lending," Information Systems Research, INFORMS, vol. 33(3), pages 765-783, September.
    2. Ajay Byanjankar & József Mezei & Markku Heikkilä, 2021. "Data‐driven optimization of peer‐to‐peer lending portfolios based on the expected value framework," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 28(2), pages 119-129, April.
    3. Nigmonov, Asror & Shams, Syed & Alam, Khorshed, 2024. "Liquidity risk in FinTech lending: Early impact of the COVID-19 pandemic on the P2P lending market," Emerging Markets Review, Elsevier, vol. 58(C).
    4. Kerry Liu, 2020. "Chinese consumer finance: a primer," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-22, December.

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