A Research On The Risk Management Of P2P Platform Under The New Regulation Framework

In 2015, the GDP growth rate of China fell to 6.9 percent. The business environment continues to deteriorate because of the economic downturn. It will be more and more difficult for enterprises to finance from banks which squeeze the credit to avoid risk. P2P lending with the characteristics of inclusive finance is a new way to solve the financing problem of small and medium-sized enterprises. However, there are also many problems need to be studied and solved behind the rapid growth of P2P lending.Many scholars have conducted extensive research about the origin and risk management of P2P lending. Qian Jinye and Yang Fei (2012) think that P2P lending with the characteristics of micro-credit is an effective complement to traditional bank credit. Lu Xin and Li Huimin (2015) indicate that P2P lending includes credit risk, legal risk, regulatory risk, operational risk, money laundering risk and network risk. Liu Hui, Shen Qingjie (2015) introduce the supervision method of America and Britain, pointing out the experience that our country can use for reference that is to pay more attention on the construction of self-discipline organization. P2P lending was proved to an effective supplement to the traditional finance. Besides the risk identification and management of P2P lending has been thoroughly studied. However, due to the lack of regulation, the research about the regulation of P2P lending still stays at the level of foreign regulatory system. Research based on domestic regulatory system is very few.By the end of 2015, many departments jointly issued the Interim Measures for the management of P2P lending (Draft) which means the regulatory gaps will be filled. The operating environment, risk conditions and regulatory system of P2P industry will experience great changes. Supervision system will have what kind of influence on P2P industry and the risk of P2P lending will how to change, how to manage P2P lending risks under the new regulatory framework will be the content this paper will focus on literature research and case analysis are adopted in this paper. Conclusions draw from this paper are as follow:first, the regulatory authorities hold the attitude of support and encourage on P2P lending. Secondly, under the new regulatory framework, Yirendai platform and P2P industry mainly face commercial risk, credit risk, liquidity risk, operational risk and legal and regulatory risk. Finally, applying the method of comprehensive risk management into the management and operational level is an effective way to strengthen the management of P2P lending risks.This paper consists five parts. The first part is the introduction. This part describes the background and significance of this research. This part also introduces the methods used and the innovations of this paper. The last section of this part is literature review.The second part is the background of this case. This part combs the related information of the case and briefly summarize and analyze the relevant framework to get the conclusion that the regulatory authorities hold encourage and support attitude on the development of P2P lending.The third part mainly analyzes the risks of P2P lending under the new regulatory framework. The train of thought is to analyze the sources and influence of the risks based on the case that are commercial risk, credit risk, liquidity risk, operational risk, legal and regulatory risks and then extend to the industry to explore the common risk.The fourth part is to build comprehensive risk management system for P2P lending platform. This part firstly discuss the construction of internal control process. Environment control is the basis of internal control followed by four steps, the risk assessment, control activities, information and communication, monitoring. Based on internal control, we could construct the comprehensive risk management framework of P2P lending platform from three aspects, target system, management factors and enterprise level dimensions.The fifth part is the summary, suggestions and prospects of the article. This part firstly summarizes the analysis of the content and demonstrate the conclusions. On the basis of the study results, some policy suggestions are put forward from the angle of the lender and the borrower, the P2P lending platform, industry self-discipline organizations and regulatory agencies. At the end of this part is the outlook and inadequacies of this study.The innovation of this paper include three aspects. From the perspective of theory, this paper seize the changes in the regulatory environment, proposing management suggestions for P2P lending based on the risk analysis which makes the research effective and practicable. From the angle of research methods, this paper adopts the method of case analysis. Case selected in this paper Yirendai is typical, because Yirendai platform have forward-looking vision. It's very creative to study the risk management under the new regulatory environment based on such case. From the point of view of policy suggestion, this paper puts forward the detailed measures and policy recommendations for the five participants of P2P lending.There are two shortcomings in this paper. The first point is that the source of the data is relatively simple for lacking supervision. Second, limited by the author's theoretical knowledge level and horizon, there are still some deficiencies. The research depth of this paper can be further strengthened.