How Does Media Sentiment Affect Financial Innovation?

P2P has gone through the whole process from development to recession in China.As one of the financial innovations that has become history,the conditions for a more complete study of its development and survival have been met,and the research results can also guide the development of subsequent financial innovations and the construction of the regulatory system.This study helps to clarify the relationship between financial innovation and external media sentiment,as well as the impact of government regulation on the mechanism of media sentiment,analyzes the external transmission mechanism of P2 P industry recession from another perspective,and provides suggestions for dealing with the relationship between nonagricultural financial innovation and external public opinion.Using the data of 3500 P2 P platforms from CSMAR database and CNRDS database from September 28,2015 to July 6,2020 as a representative of financial innovation to research,the main conclusions are as follows:(1)In general,sentiment is positively correlated with the number of financial innovation borrowers,and the impact on private platforms is higher than that on non-private platforms.(2)Sentiment could affect the trading volume by affecting the influence of investors and borrowers.There is also a transmission mechanism that sentiment could affect the potential risk of the platforms by acting on the number of borrowers.Besides,the transmission mechanism of the sentiment acting on the trading volume and the accumulated amount to be repaid have significant difference between the private platforms and the non-private platforms.(3)The higher the sensitivity of the platform’s accumulated amount to be repaid,the easier the risk is to break out,and the shorter the duration of financial innovation.Non-private platforms have lower sensitivity on average and higher level of resistance to market risk.(4)Timely regulatory policies are conducive to the benign transformation of financial innovation traders.In addition,changes in government regulation will affect the effect of sentiment.And the advantages of private platforms no longer exist after the policy environment changed,which indicates that the policy has some indirect effects.(5)The changes in policy regulation have different effects on the sentiment transmission mechanism in different background platforms.The change of policy also affects the sensitivity of the platform’s accumulated amount to be repaid.After the tightening of policy,financial innovation platforms have a stronger ability to resist risks.The role of policy in the sensitivity of financial innovation is conducive to the survival of the platform.(6)The survival analysis results show that the survival function before and after the policy are significantly different,and the survival function of private and nonprivate platforms are also significantly different.The survival probability of platforms that went online after the policy was tightened or the background is private is lower overall.Cox regression results show that the sensitivity has a great impact on the survival of financial innovation.The main contribution of this paper is to use actual data to analyze the relationship and mechanism between external media sentiment and financial innovation,as well as the impact of changes in government regulation on the mechanism of sentiment.The results suggest that financial innovation products and platforms should pay attention to the two-way effect of external public opinion,and financial innovation without social connection should pay more attention to negative public opinion.At the same time,the introduction of policies oriented to financial innovation should not only consider the objectives of the policy itself,but also consider its indirect effect on enterprises without social connection.