Brief introduction of Peer-to-peer network loan

Focus

Internet Financial Regulation

Peer-to-peer Network loan exists, the current economic and financial environment has its important significance, but Peer-to-peer network loans are facing a lot of problems, it enjoys the regulatory policy arbitrage, but also lack of normative. These problems are the important focus of the current hot discussion on Internet financial regulation. Specifically, there are seven major problems, such as reserve, illegal, false information, wind control, self-discipline, credit, and traditional financial challenges.

We cannot blindly exaggerate the power of peer-to-peer lending. The main reason for the development of Peer-to-peer platform is that traditional finance still enjoys monopoly dividend, traditional finance's indifference to small micro-loan clients and low rate of deposit return. But in any case, the Peer-to-peer platform has not been able to shake, not to mention subversion of traditional finance, its own development is under great pressure. These are also issues that need to be considered for Internet financial regulation.

At the beginning of the new Year, Peer-to-peer network loans more hot. January, the national network of Peer-to-peer credit transactions reached a record high, more than 10 billion yuan. More network loans companies to create operations, the bank "regular" also began to enter the market.

There is no doubt that Peer-to-peer network loan is a valuable supplement to the current Chinese financial structure, financial thinking concept and investor investment channel, which is a challenge to the traditional financial industry. In terms of conceptual value, its significance is far-reaching; in real value, a number of Peer-to-peer network loan platform data show that from such as the north of the rich areas of funds to the relatively backward areas of the flow, not only help to solve the small micro-enterprises operating capital flow, expand personal consumption, but also enhance the financial support for the underdeveloped areas. In addition, the existence of the standard Peer-to-peer network loan is also a forceful expulsion of the "usury" behavior.

But on the other hand, Peer-to-peer network loan faces many problems, it enjoys the regulation policy arbitrage, also lacks the normative. These problems are the important focus of the current hot discussion on Internet financial regulation. It is a mistake for the market to emphasise the characteristics of peer-to-peer financial media. In fact, the Peer-to-peer platform itself is still a media, intermediary. As with traditional financial media, the existence of any intermediary will change over time. The author concludes that the current Peer-to-peer network loans are facing problems include:

First, the issue of reserves. As a financial services enterprise, the Peer-to-peer network loan company is not currently required to withdraw reserves. But if banks and other financial institutions have provisions for reserves, why is Peer-to-peer networking not needed? One might say that peer-to-peer platforms are just intermediaries. But in fact, peer-to-peer this financial platform and the general intermediary agencies, such as real estate intermediary has the essential difference, its operating bankruptcy directly affects the investors ' funds and will have a impact on social stability. Here I am not saying that Peer-to-peer network loan platform to maintain the same as banks and other financial institutions such as the level of risk reserves, but this risk prevention tool is necessary. At present, even if some of the better conditions, more risk-conscious network lending companies set up a risk reserve, its total and proportion is still very low, and the reserve is not managed by third-party agencies, not to mention the lack of mention, omission, not to mention the situation also exists. Therefore, the question of reserves cannot be evaded.

Second, false information. Peer-to-peer Network Loan Company's survival is facing great pressure, in order to attract more investors, some peer-to-peer platform can not calmly pursue long-term and stable development strategy, but eagerly chasing the scale of short-term financing, looking forward to wind investment gold follow-up. Under such a short-sighted target, some platforms provide false or untrue information to investors. In every aspect of its performance, for example, some companies deliberately conceal the borrower's bad financial information, information disclosure is not transparent, unclear, or even deliberately distorted; some companies exaggerate the financing amount of venture capital, it is clear that the VC has conditional, phased intention to invest, but was deliberately promoted as the actual financing amount, But not professional people are basically unable to distinguish.

Third, illegal conduct. The illegal behavior here is not a clear objection by central banks such as deposit and the bank. At present, even some self-styled rigorous peer-to-peer network loans are doing some illegal things. For example, the existence of the second sign. The so-called "second standard" is to attract investors, but by Peer-to-peer platform artificially manufactured, fictitious High-yield, ultra short term of the loan project. According to the incomplete statistics of the first net loan, only January this year, the National Peer-to-peer Net Credit second standard transaction amount amounted to 170 million yuan. For example, although some Peer-to-peer platform to seek third-party payment platform to deposit investors ' funds, but the funds are not entirely controlled by investors, in the capital of the link, investors still need peer-to-peer platform approval. Thus, in fact, peer-to-peer platforms have been involved in the operation of funds through associated transactions. For example, some platform in order not to lose customer funds, and to give customers stranded funds (also that is not used for investment projects) a certain amount of return commitment, this is also because the relevance of the operation becomes a disguised deposit, even if investors are funded by Third-party payment platform hosting.

The problem of self-discipline. If you ask any of the peer-to-peer companies, they will stress that they want to be regulated by the government. The reason, in addition to evade legal risk, but also help set up the industry entry threshold to enhance investor confidence. But until regulators and regulations are clear, the central bank's emphasis is still on the Peer-to-peer platform's own constraints. But in fact self-discipline is only a unilateral commitment. From an early age, if the violation of the self-regulatory provisions, the consequences will be a huge question mark; from the big side, self-discipline is closed, and without the effective coordination of regulatory agencies, micro-risk can still not be separated from other risks in the macro market. In particular, the above-mentioned false and illegal practices are prevalent in the industry. Therefore, on the basis of self-discipline, regulation and regulations are necessary, and promote financial innovation is not contradictory. In addition, at present, the self-discipline organization which is dominated by central bank and limited Peer-to-peer network loan platform has important difference from the self-discipline group of industry organization, not only lacks initiative, but also cannot represent most of the Peer-to-peer platform which has not been included. And these organizations with a few Peer-to-peer platform to participate in the interests of their own to set up a different industry entry threshold, in order to strengthen their competitiveness. This is a stark contrast to the theory of Internet equality.

Five, the wind control problem. Risk control is at the heart of any financial business company involved. At present, there are two levels of wind control problems, in the micro, each company is promoting its own wind control, but in fact, has not seen a very standardized wind control process. Most of the platforms in the pursuit of development on the road, can not balance the growth rate of platform transactions and project risk, as well as customer relations and project wind control measures of conflict, in contradiction, wind control in most of the second place. On another level, the trading stock of Peer-to-peer platforms is still expanding. There is a lack of awareness in the regulatory sector about the risks of the system. Although the trading stock of the Peer-to-peer platform is only 100 billion yuan, realize that the impact of Peer-to-peer platforms on the financial system can be increased at a geometric level at the advent of systemic risk. Let's not forget that the financial crisis that swept the world in 2008 was triggered by subprime mortgages, which accounted for less than 1% of the global bond market.

The question of credit. Lenders ' credit surveys are a problem for peer-to-peer platforms, as the current central bank's information is not open to peer-to-peer platforms. Not only this, the central bank credit information content is limited, the lender's Non-bank loans are not fully integrated into the central bank's credit system. A lender can borrow on multiple peer-to-peer platforms and its loan information is not known to other peer-to-peer platforms and banks. This will have a huge damaging effect on the entire financial system. Therefore, the early introduction of Peer-to-peer lending information into the credit system is an urgent problem to be solved.

The challenge from traditional finance. At present, it is popular to say that internet finance is a subversion of traditional finance, which I think exaggerates the role of internet finance. In fact, if traditional finance can quickly change the mode of operation, then China's current Peer-to-peer network loan will face enormous survival pressure. In fact, we see that since the beginning of the year, many Peer-to-peer network loans to face the shortage of investment projects, there is no project can be cast so that some investors began to withdraw funds from the Peer-to-peer site. The main reason for this situation is the monotony of most peer-to-peer platform products, not only the vast majority of the project is mortgage lending, and bank lending is no different, and the project from a small source. Traditional finance, such as banks, not only has incomparable advantages in capital, but also has many project sources, and the strict supervision makes the possibility of system risk lower. If traditional finance can change the mode of thinking and actively participate in small micro-enterprises and personal financing services, then many of the days of the collapse of the Peer-to-peer platform may be close at hand. In addition, Peer-to-peer network loans can not meet the financing needs of large and medium-sized enterprises. Excessive exposure to small micro-enterprises and individual loan businesses with high risk directly increases their risk. At the same time, we see that peer-to-peer Network loan innovation is mainly limited to marketing channels, in product design, risk control, there is no traditional finance is not. Traditional finance can be extended to a peer-to-peer platform, while the opposite is extremely difficult. In fact, the vast majority of homogeneous Peer-to-peer network loan platform is not profitable. How to face the awakening of the traditional financial sleeping lion is a serious problem which can not be neglected.

In short, the existence of Peer-to-peer network loans in the current economic and financial environment has its significance, but we can not blindly exaggerate the power of Peer-to-peer network loans. The main reason for the development of Peer-to-peer platform is that traditional finance still enjoys monopoly dividend, traditional finance's indifference to small micro-loan clients and low rate of deposit return. Peer-to-peer Network loan platform faces a series of challenges in the future, some can be overcome through supervision, improvement, and some need a huge transformation. But in any case, the Peer-to-peer platform has not been able to shake, not to mention subversion of traditional finance, its own development is under great pressure.

Guojie (Shanghai Union and Finance managing director, former US hedge fund Z A is managing director and Asia Pacific General manager)