An Empirical Study On Driving Forces And Survival Analysis Of P2P Lending Industry

In January 2016,the State Council issued "Plan to Promote the Development of Inclusive Finance(2016-2020)",which aims at establishing an inclusive financial service and security system by 2020.P2 P internet lending,as an important form of internet finance,makes up for business blank of traditional banking system.P2P industry develops rapidly since 2013.however,its growth also breeds a huge risk.E-zubo events,Dada event,as well as Zhongjin event sound the alarm bell in the whole of the internet financial industry.At the end of October 2016,there are 3739 P2 P companies,the number of problem platforms reaches 1727,accounting for up to 46.2% of total platforms.Neither the integrity of platforms,nor the individual platform case study can give a reasonable explain for such a high proportion of problem platforms.The empirical research literature mostly uses the transaction data of top P2 P platforms.Its high quality determines its lack of representation,and lacks power to explain why the problem ratio can be so high.Transactions data from a specific P2 P platform can be used to analysis the influence factors and mechanism for the success rate,probability of default,but could not explain why firms using the same operation mechanism could be so different.Therefore,I manually collects the full sample data of P2 P industry from the network(Wang dai zhi jia,Wang dai tian yan and Di yi wang dai).Based on this new and innovate data,this paper progresses from a macro view to a micro view,studies which forces drive the rapid development of the P2 P industry and the key factors affecting the sustainable development of individual P2 P platform.On the one hand,using province-level panel data,I find that:(1)the financing needs of small and micro private enterprises is an important factor driving the development of P2 P industry;(2)GDP,wealth of residents are not the reason for the rapid development of P2 P industry;(3)Regions with more securities investors and higher level of marketization own slow development of the P2 P industry.The above results means that the rapid development of P2 P internet lending is more caused by the enterprise "financing" demand,while the new and high risk P2 P itself may be an important reason to restrict and prevent investor from participating in.Furthermore,this prevention from high risk amplifies the potential risk of the entire P2 P industry.Because this prevention results in a higher risk preference of participator,which means that if the borrower’s risk could not well controlled,then investors will suffer lose.The invisible repayment for sure commitment is likely to cause the P2 P platform to run away.On the other hand,this paper studies the key factors that affect the sustainable development of P2 P platform by using the individual-level data of P2 P industry.This paper divides the factors into six categories: basic information(loan balance,trading volume,registered capital),corporate governance(VC,the type of controller,whether listed or not,finance experience and education of executives),product information(average interest rate,average maturity,whether there are loans with maturity bigger than 12/24 months or amount larger than 1 million),security information(whether there is insurance offered by insurance companies,guarantees or risk reserves),mobile service(whether the platform provides mobile service such as app or wechat),evaluation from users(withdrawals,guard,service and experience).The paper uses non-parametric survival analysis and Cox proportional hazard model to analyze the factors affecting the survival of P2 P platforms.I find that:(1)using the Kaplan-Meier estimator,in the long term,the P2 P industry will have a stable survival rate.The ratio of P2 P platforms whose life is more than 10 years(125 months)will be 6.21%.(2)The scale factor,such as volume and loan balance has a significant positive effect on the survival rate of P2 P platforms,but not the registered capital.(3)Corporate governance measures,such as the type of controller,VC participant,finance experience and education of executives,can all significantly improve the survival probability of P2 P platforms;(4)Product characteristics also have a significant impact on the duration of P2 P.(5)for security measures,P2 P platform providing insurance and risk reserve has a longer life.(6)P2P platform with a higher appraisement from users survives longer.(7)P2P platform providing mobile service has a lower rate of risk.The possible contributions of this paper include:(1)A new and innovative data covered the whole P2 P industry,which avoids bias and lack of universality by using top P2 P transaction data.(2)This paper finds that a large number of problems appear in the P2 P industry is more likely to be explained by the weakness risk identification and judgment of investors.(3)Different from the previous qualitative research,using the province-level data this paper systematically studies the driving factors of the development of P2 P industry for the first time.(4)Use the survival analysis model to analyze the key factors of the sustainable development of P2 P platforms for the first time.During one year of rectification for the P2 P industry,what indicators should be pay attention to,and how to set up a reasonable standard to evaluate and regulate the P2 P platforms? The results of this paper provide important and useful empirical evidence.Whether for investors to choose a P2 P platform to invest or to help regulators to set up a reasonable regulatory standard,this study will give an useful reference.