NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, May 13, 2019

Can China’s peer-to-peer lending industry be saved?

The prospect seemed far-fetched just a few months ago, when P2P platforms were failing by the dozens and angry investors were protesting in major cities across the country. But after a nearly two-year government campaign to root out fraud and improve lending standards, a potential path to recovery for the world’s biggest P2P market is becoming clearer.

Industry insiders are betting that a handful of closely regulated players will emerge from the cull. They envision a revamped model — similar to the one adopted in America — in which P2P platforms match small borrowers with institutional money managers and banks, instead of individual savers. That would allow China to keep funneling much-needed credit to small companies, while at the same time containing exposure to investors who can bear the risk.

Photo courtesy of faungg’s photos.