Government Affiliation and Peer-to-Peer Lending Platforms in China

61 Pages Posted: 14 Feb 2018 Last revised: 12 Apr 2021

See all articles by Jinglin Jiang

Jinglin Jiang

Tsinghua University - PBC School of Finance

Li Liao

Tsinghua University - PBC School of Finance

Zhengwei Wang

Tsinghua University - PBC School of Finance

Xiaoyan Zhang

Tsinghua University - PBC School of Finance

Date Written: February 10, 2021

Abstract

With thousands of co-existing and competing platforms, the Chinese peer-to-peer (P2P) lending market experienced both high growth and high failure rate. We hand collect unique data for these P2P platforms and investigate the differences in performances and survivals for platforms with and without affiliations with state-owned enterprises (SOEs). P2P platforms with SOE affiliations have higher trading volumes, attract more investors, and offer lower interest rates. These platforms also survive significantly better than those without the SOE affiliations, especially during market downturns. Using P2P platforms with fake SOE affiliations as identification, we show that the SOE affiliation itself (not related to the fundamentals) is an important signal for P2P market participants. These results can be helpful to investors and regulators, especially those from other emerging markets.

Keywords: Peer-to-Peer Lending Platforms, Fintech, Government Affiliation, State-Owned Enterprise, Emerging Markets

JEL Classification: G21, G28, O3

Suggested Citation

Jiang, Jinglin and Liao, Li and Wang, Zhengwei and Zhang, Xiaoyan, Government Affiliation and Peer-to-Peer Lending Platforms in China (February 10, 2021). PBCSF-NIFR Research Paper, Journal of Empirical Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3116516 or http://dx.doi.org/10.2139/ssrn.3116516

Jinglin Jiang

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

Li Liao

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

Zhengwei Wang

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China

Xiaoyan Zhang (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

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