China’s P2P Lending Market Experiencing Growing Pains

The P2P lending industry in China is growing in leaps and bounds but so are the repayment issues, according to the latest report from Online Lending House.

More than doubling the number of cases observed in May this year, the Chinese P2P industry saw a spike in borrowers that “ran away” with money, pushing the number of repayment issues to 125 in June.

The hike in such cases comes against solid growth of P2P websites, which saw an approximate 22 percent increase in number between January and June, ultimately totaling 2,028. Last year, Chinese P2P lenders lent over $32.5 billion, giving out about four times as many loans than any other country in 2014.

But despite the growing occurrence of repayment issues, investments banks are bullish about the growth. U.K-based investment bank Liberum Capital Ltd., for example, predicted that the growth momentum would double this year, pushing the value to over $60 billion.

Factors like greater smartphone penetration and access to big data for alternative lenders have been key components in the dizzying growth of the lending market. However, it has also raised regulatory concerns with over 98 P2P lenders shutting their doors last December.

“A lot of money is coming in quickly, and [the platforms] don’t know how to manage it,” said Dianrong CTO Ling Kong. “Without the right risk management and asset allocation, there’s also a lot of systematic risk.”

To check out what else is HOT in the world of payments, click here.



On Tuesday, March 31, 2020 at 9:00 AM (ET) join PYMNTS CEO Karen Webster and panelists Vincent Kilcoyne and Roland Brandli of SmartStream for an in-depth discussion on the need to use transformative digital strategies to remain relevant in today’s challenging financial landscape. The discussion will cover strategies that will allow clients to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with regulation.

Click to comment