Impact of Regional Differences on P2P Lending, Evidence from China

• Název práce v češtině: Regionální rozdíly v P2P lendingu, příklad Číny
• Název v anglickém jazyce: Impact of Regional Differences on P2P Lending, Evidence from China
• Klíčová slova: Čína, půjčky P2P, míra úspěšnosti půjček, regionální rozdíly, politika regulace
• Klíčová slova anglicky: China, P2P lending, the success rate of borrowing, regional difference, regulation policy
• Akademický rok vypsání: 2017/2018
• Typ práce: diplomová práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: Mgr. Magda Pečená, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 11.06.2018
• Datum zadání: 11.06.2018
• Datum a čas obhajoby: 17.09.2019 09:00
• Místo konání obhajoby: Opletalova - Opletalova 26, O105, Opletalova - místn. č. 105
• Datum odevzdání elektronické podoby: 31.07.2019
• Datum proběhlé obhajoby: 17.09.2019
• Oponenti: Ing. Vilém Semerák, M.A., Ph.D.

Seznam odborné literatury

Chen,D.Y., Lou,H.,Hong,X.,2013. Gender Discrimination towards borrowers in online P2P Lending. Wuhan International Conference on E-Business. 5-25.
Lu,C.M., Lu,Zhang., 2018. Research on Risk Factors Identification of P2P Lending Platforms. American Journal of Industrial and Business Management. Vol.08 No.05. http://file.scirp.org/Html/16-2121228_84858.html
Ravina,E.,2008. Love & Loans: The Effect of Beauty and Personal Characteristics in Credit Markets.
Gao,Y., Shih-Heng,Y., Yih-Chearng,S., 2018. The performance of the P2P finance industry in China. Electronic Commerce Research and Applications. 30(2018):138-148.
Guo,F., 2016. Network nickname and success rate and default rate of P2P lending. Economics and Science.
Duarte, J., Siegel, S., and Young, L., 2012. Trust and Credit: the Role of Appearance in Peer-to-Peer Lending. Review of Financial Studies.Vol.25: 2455-2484
Wu,X.Y.,Ju,Y., 2012. Online Lending Model Based on Least Squares. Journal of Xiamen University.2012(6):980-984.
Herzenstein, M., Andrews, R. L., 2018. The democratization of personal consumer loans? Determinants of success in online peer-to-peer loan auctions. Bulletin of the University of Delaware. 15(3) :274–277.
Peng, H.F., Yang, L.M., Tan, X.Y., 2016. How regional differences affect the behavior of P2P platform lending. Modern Economic Science. 38(5).
Stern,C., Mäkinen,M., Qian,Z.X., 2017. FinTechs in China – with a special focus on peer to peer lending. Forthcoming in Journal of Chinese Economic and Foreign Trade Studies

Předběžná náplň práce

Motivation
As a new financial intermediary between borrowers and lenders, P2P lending refers to unsecured lending between lenders and borrowers through online platforms without the intermediation of any financial institutions. It is favored by borrowers and investors due to its declared low lending interest rates and fast liquidity, but credit issues such as adverse selection and moral hazard in P2P lending platform make it also become an obstacle to further development of the P2P industry. According to the data from wangdaizhijia (the first and the largest third-party online lending information platform in China) by September 2018, the cumulative number of P2P platforms in China reached 6,396, of which the number of cumulative problematic platforms reached 2,414. In 2018, the total number of closure and problematic lending platforms was 1,279, of which Zhejiang Province had the largest number, reaching 299; followed by Shanghai, Guangdong, and Beijing. The number of closures and problematic platforms in the four provinces and cities accounted for 69% of the total number of closures and problematic platforms. Hence, the purpose of this work will be to analyze the question of the regional difference in the different regions and discuss the supervision of P2P lending platform in China.
Many researchers have studied the factors affecting the P2P lending platform, such as, Dongyu Chen, Lou Hao and Hong Xu (2013) have studied that there is significant gender discrimination in P2P lending market in China, female borrowers are less likely to be funded than male borrowers, but their default rates are lower. Enrichetta Ravina (2008) found out that Beautiful borrowers are 1.41 percent more likely to get a loan and pay 81 basis points less than an average-looking borrower with the same credentials. However, according to the existing research, there are few studies that focus on the influence of regional differences on the P2P lending. China is the third largest country in the world, there are huge differences in the economic development of different regions, according to the regulations of the Central People's Government of the People’s Republic of China, China is divided into six major geographical regions: northeastern China, northern China, eastern China, central and southern China, southwestern China and northwestern China based on China’s administrative region and geographical location, this paper will discuss the relationship between borrower’s regional difference and 1) borrowing success rate and 2) loan default rate Then further explore the reasons behind the differences from the aspects of economy, finance and supervision.


Methodology
Method of Literature review: The first step is collection of primary studies, this paper will sort out and analyze a large number of relevant literature, then summarize the theory and research methods related to P2P lending, and determine the research ideas and research contents of this paper based on the current development status of China's P2P lending platform.

Probit model method: First using the probit regression model to test whether the success rate and default rate of borrowings are significantly different among the four economic regions of China. I will classify the borrowing data of the P2P lending platform according to China's major regions, and wield the probit regression to explore the relationship between the basic information of borrowers, lending information with the success rate of borrowing and default rate, then empirically study the specific reasons for the difference and make heterogeneity analysis on lending that classified according to economics, finance and regulations.


Expected contribute:
In contrast to previous studies on this topic, I will take into account the impact of the regional differences on P2P lending, especially I will further study the reasons behind. The success rate of borrowing, default rate and number of problematic P2P platform in different regions are expected to be different, and the reasons behind the regional differences on P2P lending which will be tested as hypothesis are expected to be of three aspects: 1) Economics: The default rate of borrowing is decreasing with the economic development; The success rate of borrowing and the number of P2P lending platform is increasing with the economic development. 2) Finance: The default rate of borrowing and success rate of borrowing are higher in the region with more traditional financial institutions; The number of problematic P2P platform is less in the region with more traditional financial institutions. 3) The regional regulations: The default rate and number of problematic P2P lending platform are lower in the region with strict regulation and the success rate of borrowing is higher in this region.
This study will summarize the regional characteristics in different regions in China, and will discuss the disadvantages of current supervision in P2P platform, then provide some advice in order to improve the recent turmoil of P2P platform in China.


Outline
1.Introduction
2.Literature Review
3.Data Description
4.Empirical Part
5.Results
6.Conclusion

Předběžná náplň práce v anglickém jazyce

Motivation
As a new financial intermediary between borrowers and lenders, P2P lending refers to unsecured lending between lenders and borrowers through online platforms without the intermediation of any financial institutions. It is favored by borrowers and investors due to its declared low lending interest rates and fast liquidity, but credit issues such as adverse selection and moral hazard in P2P lending platform make it also become an obstacle to further development of the P2P industry. According to the data from wangdaizhijia (the first and the largest third-party online lending information platform in China) by September 2018, the cumulative number of P2P platforms in China reached 6,396, of which the number of cumulative problematic platforms reached 2,414. In 2018, the total number of closure and problematic lending platforms was 1,279, of which Zhejiang Province had the largest number, reaching 299; followed by Shanghai, Guangdong, and Beijing. The number of closures and problematic platforms in the four provinces and cities accounted for 69% of the total number of closures and problematic platforms. Hence, the purpose of this work will be to analyze the question of the regional difference in the different regions and discuss the supervision of P2P lending platform in China.
Many researchers have studied the factors affecting the P2P lending platform, such as, Dongyu Chen, Lou Hao and Hong Xu (2013) have studied that there is significant gender discrimination in P2P lending market in China, female borrowers are less likely to be funded than male borrowers, but their default rates are lower. Enrichetta Ravina (2008) found out that Beautiful borrowers are 1.41 percent more likely to get a loan and pay 81 basis points less than an average-looking borrower with the same credentials. However, according to the existing research, there are few studies that focus on the influence of regional differences on the P2P lending. China is the third largest country in the world, there are huge differences in the economic development of different regions, according to the regulations of the Central People's Government of the People’s Republic of China, China is divided into six major geographical regions: northeastern China, northern China, eastern China, central and southern China, southwestern China and northwestern China based on China’s administrative region and geographical location, this paper will discuss the relationship between borrower’s regional difference and 1) borrowing success rate and 2) loan default rate Then further explore the reasons behind the differences from the aspects of economy, finance and supervision.


Methodology
Method of Literature review: The first step is collection of primary studies, this paper will sort out and analyze a large number of relevant literature, then summarize the theory and research methods related to P2P lending, and determine the research ideas and research contents of this paper based on the current development status of China's P2P lending platform.

Probit model method: First using the probit regression model to test whether the success rate and default rate of borrowings are significantly different among the four economic regions of China. I will classify the borrowing data of the P2P lending platform according to China's major regions, and wield the probit regression to explore the relationship between the basic information of borrowers, lending information with the success rate of borrowing and default rate, then empirically study the specific reasons for the difference and make heterogeneity analysis on lending that classified according to economics, finance and regulations.


Expected contribute:
In contrast to previous studies on this topic, I will take into account the impact of the regional differences on P2P lending, especially I will further study the reasons behind. The success rate of borrowing, default rate and number of problematic P2P platform in different regions are expected to be different, and the reasons behind the regional differences on P2P lending which will be tested as hypothesis are expected to be of three aspects: 1) Economics: The default rate of borrowing is decreasing with the economic development; The success rate of borrowing and the number of P2P lending platform is increasing with the economic development. 2) Finance: The default rate of borrowing and success rate of borrowing are higher in the region with more traditional financial institutions; The number of problematic P2P platform is less in the region with more traditional financial institutions. 3) The regional regulations: The default rate and number of problematic P2P lending platform are lower in the region with strict regulation and the success rate of borrowing is higher in this region.
This study will summarize the regional characteristics in different regions in China, and will discuss the disadvantages of current supervision in P2P platform, then provide some advice in order to improve the recent turmoil of P2P platform in China.


Outline
1.Introduction
2.Literature Review
3.Data Description
4.Empirical Part
5.Results
6.Conclusion