On The Regulation Of Legal Risk Of P2P Lending

Peer-to-peer lending platforms are online platforms where borrowers place requests for loansonline and private lenders bid to fund these in an auction-like process. Peer-to-peer lendingplatforms are important channels for the capital owners and the people in need of funds forintermediation.This emerging informal financial form relieves structural supply and demandimbalances in credit markets,and the peer-to-peer lending boom thanks to its convenience,flexibility and profit.Yet,the absence of regulation and excess marketization of peer-to-peer lending bring plentyof risks and threats to its prosperity.To ensure the healthy development of peer-to-peerlending,we need to bring borrowers,lenders and peer-to-peer lending platforms undersupervision and perfect risk control system.This paper is divided into three chapters.The first chapter covers the basic theories ofpeer-to-peer lending.The first part covers the rise,main operation patterns and definition ofpeer-to-peer lending.Then in the second part,the peer-to-peer lending platform is comparedwith commercial bank,non-absorbing-deposit loan companies and traditional privatefinancial institutions. Peer-to-peer lending platforms are non-financial firms providingintermediary service.Chapter two sets forth the numerous risk of peer-to-peer lending. The first part points out theunsoundness of legal institutions.The second part analyzes the credit risk of peer-to-peerlending,including unsoundness of risk assessment and insecurity of lending capital.The thirdpart dissect operational risks of peer-to-peer lending.The fourth part display businessrisks,including risks of bad debt,risks of litigation and risks of lack of effective exitmechanism.Chapter three put forward some improving suggestions to regulatory system and is dividedinto three parts.The first part suggests establish a full-fledged legal system by defining thelegal nature of peer-to-peer lending,regulatory subject and supervisory principle. The secondpart suggests building a supervisory system composed of multiple layers. The third partproposes to complete credit risk assessment of peer-to-peer lending.The conclusion part traces the author’thread and recaps toward the end of this paper.