Why did the Peer-to-peer Lending Market Fail in China?


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The peer-to-peer (P2P) lending market was once a role model for Fintech development in China. The market reached its peak in 2017 with more than 5,000 platforms and a trading volume of CNY 2.8 trillion. However, after several waves of fraud and platform failure, the market completely collapsed in November 2020 without a single platform surviving. Several regulatory attempts such as providing credible information disclosure channels proved unable to stop the vicious cycle of platforms failing and lenders losing confidence. We argue that the limited regulatory capacity and the intense competition together caused the failure of China's P2P lending market because P2P platforms were attracted to offer principal guarantee terms and expose to large financial risks.

The presentation slides are available here (updated on 3 December 2021). 

About the speaker

Yangguang (Sunny) Huang is Assistant Professor of Economics at the Hong Kong University of Science and Technology. He is also a research affiliate at the Center for Economic Policy and faculty associate of the Division of Public Policy and Institute of Emerging Market Studies at HKUST. Sunny received his Ph.D. in Economics from the University of Washington, Seattle. His research areas are Industrial Organization and Applied Microeconomics. The theme of his research is combining economic models and econometric techniques to study policy-oriented topics. His research projects tackle problems in auction, procurement, corruption, financial development, digital economy, online markets, and innovation policy.


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