The Root Causes And Solutions Of Peer-to-Peer Lending's Runaway Phenomenon

In recent years, with the deepening of the development of the Internet, the P2P (Peer to Peer) business has grown up quickly in China. The P2P lending acts as new Internet innovation mode and promotes deeper reform of our country's lending patterns. However, the negative events like P2P "runaway'occur frequently and bring more concerns. What is the root cause of P2P runaway phenomenon? This question needs us more attention to dig out its root cause and find the solution to avoid further more serious problem.This article analyzes the root cause of P2P lending's runaway phenomenon from several aspects as following, which to help the readers for deeper thinking and timely countermeasures to resolve. First of all, the essence of P2P lending is still categorized as Financial Lending, which to supply or demand moneys between investors and borrowers. Thus, the most important reason of the P2P tending's runaway is the factor of Information Asymmetry. Secondly, by analyzing P2P lending's various patterns, it points out the existing various P2P model intensifies the runaway phenomenon. Thirdly, insufficient ability of P2P lending's risk control increases the likelihood of the risk of runaway. Finally, inadequate monitoring and supervision over P2P lending platform increase the possibility of its runaway. Abovementioned reasons is the deeper root cause of P2P lending's runaway, which needs our more attention in its future development.Based on above analysis of its root cause, this article also raises the solution to solve its negative impacts. First, clear the position of P2P lending as the exchange platform of lending. Second, improve the information disclosure to reduce the information asymmetry of P2P participants. Third, establish new credit system for P2P lending. Fourth, improve the mechanism of risk control over P2P platform. Fifth, clear the responsibilities of regulatory supervision and rules. Keep the continuous internal and external improvement to promote the healthy development of P2P lending, which to help the deepening of financial reform within China.