Analysis On The Operation Model Of P2P Loan Finance

Peer-to-peer lending(P2P lending) finance is experiencing rapid growth. As the transparentness of private loan and a remarkable sub industry of the internet finance, P2 P lending is not perfect in theory, technology and policy. There are some doubts and arguments about its value, especially about the fitness in China’s market. While P2 P lending based on the internet is spread to China, the outbreak of the P2 P lending industry has taken place since the second half of 2011. Instead of basing on the internet totally like foreign countries, domestic P2 P lending firms are dependent on the offline channel, and its interest rate is higher than that of banks at the same time. In the circumstances of the lack of supervision and poor credit, some P2 P firms are frauds and some of them overlook the risk of the lending. That’s why since the second half of 2013, a lot of P2 P firms bankrupted because of bank run. So the research of P2 P lending is imminent. What is the differences between P2 P lending and traditional lending? What is the core of P2 P lending? What are the factors that support the transformation from traditional lending to P2 P lending? All these questions are worthy studying.This paper firstly elaborates the agents and bases of the P2 P lending, and then figures out the development venation of the internet finance in China. And then it introduces development status and concerns of P2 P lending. This paper classifies the P2 P lending firms into two kinds, which are Agency-P2 P and Creditor-P2 P. After analysis of the core running modes of the two kinds of P2 P firms, it creates two models to simulate the running modes, and then gives some advises. At last of the paper, based on the models, it analyzes the risks and supervisions of the P2 P lending industry.The results show that:(1) P2 P lending is a financial innovation in the progress of financial deepening.(2) P2 P lending firms are classified as two kinds, Agency-P2 P and Creditor-P2 P, and there are some new means of credit in China.(3) Creditor-P2 P allocates the risk by splitting the cash flows.(4) Agency-P2 P guides the investors for its different goals by different guiding rules.(5) The supervisions should be loose at first and then become tenser.The innovation of this paper is:(1) the definition of the internet finance and the classification of the P2 P lending.(2) framework of splitting the cash flow for Creditor-P2 P firms.(3) the description of the running mode of the Agency-P2 P by guiding rules.