Study On The Network Cooperation Financing Platform Causes And Empirical Study

As a new type of personal financial service, Peer-to-Peer Lending which combines web 2.0 technology with social lending has achieved great accomplishment in less than five years’ history. The appearance of Peer-to-Peer Lending not only provides a new financing channel and a new investment instrument, also points out a new way of financial service innovation.In spite of the big success Peer-to-Peer Lending has achieved, there are some problems exist in the running model of this new financial service. This paper had analyzed those problems from the perspective of credit risk controlling. The body of this paper is composed of five parts.The first part of this paper puts forward the research background, and expounded the purpose and significance. Then reviewed the related research achievements and advanced the idea and research method.The second part of this paper gave the related definitions of Peer-to-Peer Lending.Based on the understanding of development which Peer-to-Peer Lending had achieved,the key point of its future had been concluded. The key point is unless those platforms can complete the risk controlling system, it can’t be matured.The third part launched research around credit risk controlling. Firstly, analyzed the causes of credit risk in these platforms, then evaluated the existing risk control system and pointed out its limitations. Finally put forward the main view which is information asymmetric the main cause of the high credit risk in these platforms. One important way of solving this is to refined the institutional construction.Based on the third part, the fourth part used game model under asymmetrical information got the optimal choices of the investor and investee: on the condition that investor could not tell the credit risk level, he will choose the bid which offers high return, and the high return often represents high default possibility. Then those investees who actually own quality credit level would give up Peer-to-Peer Lending. And because of the cost of default is limited, investees had enough motive to change the way of using those loan got from the platform which made investor faced higher default risk. The result of clearing-market was there were no deals anymore and the market did not exist.Then, the results of analyzing transactional data from the Red Ridge showed thatthe endowment of credit records and interest rates on a negative correlation which is the higher interest rates are, the lower the credit records are. This phenomenon which confirmed that adverse selection does exist in the Peer-to-Peer platform. The other result is the more popular the investee is, the lower interest rate will cost him or her,which the more investors get involved into one bid, the lower the interest rate is. This phenomenon confirmed the members on the platform can make use of virtual active social relationship reduce the financing cost.In addition, after introducing bids with guarantee, the average rates on the platform have declined and the influence of credit have been enhanced. Guaranteed bids by the guarantor may influence the credit level and reduced the incidence of adverse selection,and at the same time, the guarantors can lower information asymmetry level by taking the function of credit certification.Finally, based on the above analysis, this paper presents the advices of optimizing the credit risk control in the Peer-to-Peer Lending platform. First of all, improving credit rating system which can lower the information transferring cost, therefore the community reputation mechanism works well. Secondly, promoting the virtual social relation network generation which can alleviate information asymmetry phenomenon and effectively restrain economic game between the participants’ opportunism tendency.Strengthening platform technology system and controlling technology risk are the third part. Standardizing the collection of individual credit information and access to the personal credit registry system in the proper time.For the healthy development of Peer-to-Peer Lending industry, it is definitely necessary clear the regulatory authority, and establish industry association, formulate industry standard.