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Lessons from the rise and fall of Chinese peer-to-peer lending

Author

Listed:
  • Chen Ding

    (University of Sheffield
    Loughborough University)

  • Anil S. Kavuri

    (Loughborough University
    Australian National University (ANU))

  • Alistair Milne

    (Loughborough University)

Abstract

This paper reviews the development and assesses the future of peer-to-peer (P2P) lending in China. Chinese P2P lending has expanded by a factor of 60 over the 4 years from 2013 to 2017. Consequently, it is now much greater, both in absolute terms and relative to the size of the economy, than in any other country. The industry though has been plagued by problematic often fraudulent business models in what was, until 2015, effectively a regulatory vacuum. A strict new regulatory regime is currently being introduced. However, the introduction of the strict new regulatory regime, especially the requirements on capital and registration are substantially reducing the volume of P2P lending. We consider the future of P2P lending concluding it is facing substantial uncertainties.

Suggested Citation

  • Chen Ding & Anil S. Kavuri & Alistair Milne, 2021. "Lessons from the rise and fall of Chinese peer-to-peer lending," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(2), pages 133-143, June.
    • Handle: RePEc:pal:jbkreg:v:22:y:2021:i:2:d:10.1057_s41261-020-00132-2
    DOI: 10.1057/s41261-020-00132-2
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    References listed on IDEAS

    as
    1. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    2. Ding Chen & Anil Savio Kavuri & Alistair Milne, 2021. "Growing Pains: The Changing Regulation of Alternative Lending Platforms," Springer Books, in: Raghavendra Rau & Robert Wardrop & Luigi Zingales (ed.), The Palgrave Handbook of Technological Finance, pages 441-475, Springer.
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    Cited by:

    1. Zhang, Yun & Liu, Yun & Zhang, Yifei & Chen, Xin, 2022. "Globalization blueprint and households’ fintech debt: Evidence from China’s One Belt One Road initiative," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 38-55.
    2. Chong, Zhaohui & Wei, Xiaolin, 2023. "Exploring the spatial linkage network of peer-to-peer lending in China," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 630(C).
    3. Davaadorj, Zagdbazar, 2024. "The influence of the digital divide on peer-to-peer lending outcomes," Finance Research Letters, Elsevier, vol. 61(C).
    4. Kotsopoulos, Dimosthenis & Karagianaki, Angeliki & Baloutsos, Stratos, 2022. "The effect of human capital, innovation capacity, and Covid-19 crisis on Knowledge-Intensive Enterprises’ growth within a VC-driven innovation ecosystem," Journal of Business Research, Elsevier, vol. 139(C), pages 1177-1191.
    5. Na Song & Isaac Appiah-Otoo, 2022. "The Impact of Fintech on Economic Growth: Evidence from China," Sustainability, MDPI, vol. 14(10), pages 1-17, May.
    6. Evangelos Katsamakas & J. Manuel Sanchez-Cartas, 2024. "A computational model of the effects of borrower default on the stability of P2P lending platforms," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 597-618, September.

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