Legal Control Of P2P Network Borrowing Risks

P2P lending is a new kind of financial model. Lenders can provide loans to theborrowers through P2P lending platform. The borrowers, the lenders and P2P lendingplatform constitute entirety P2P lending legal relationship. Because eachparticipation`s behavior can raise risks, risk analysis and risk control by law mustform each sides.The first chapter of this paper is to define some basic concepts of P2P lending inorder to distinguish P2P lending, P2P lending platform and manager of it, theborrowers of P2P lending and the lenders of P2P lending with each other. P2Plending happened in P2P lending platform, to distinguish P2P lending and P2Plending platform is very important to risk analysis and control the risk by law.The second chapter of this paper introduced and analyzed a P2P lending platform–PPD which founded earliest in China. Through the analysis of this example, we canlearn the basic flow of P2P lending and how it work. P2P lending platform and itsmanager neither the borrower nor lender, but plays a very important role between theborrowers and the lenders. P2P lending platform also help to credit review, provideand return the found to each other, ensure the safety and provide consultation to bothsides.In the third chapter, we analysis the risk raised by each participants combinedwith the second chapter. The borrowers of P2P lending will raise credit risk and therisk of illegal fund-raising. The lenders of P2P lending may raise money launderingrisk, the adverse selection risk and speculative risk. P2P lending platform will raisethe scope of business risk, credit audit risk, intermediate account risk.In the fourth chapter, based on the solution of the first three chapters. Accordingto the different subjects we should use specific measures to control risk by law.Because of the risk of the borrowers raised by the lack of supervision and the problemof personal credit system, we should strengthen the supervision to the borrowers andthe construction of personal credit system. And also, should we strengthen thesupervision to the lender to control the risk raised by the lenders. We should establisha complete market access system, clear the rights and obligations of P2P networklending platform and the scope of business, to control the risk of P2P network lendingplatform.