Beginning from the first P2P platform in 2007, Chinese P2P lending market has become the largest in the world. Up to now, the industry has been experiencing big changes for regulation. How does policy change impact on this nascent market in China?
Fabio Braggion, Alberto Manconi and Haikun Zhu exploit two policy interventions in the market for real estate mortgages in a number of major Chinese cities, which first increase (in 2013) and later reduce (in 2015) the demand for P2P lending, while leaving overall credit demand unchanged. They analyze P2P loan applications and credit outcomes around the two policy interventions, comparing affected and unaffected cities in a difference-in-differences setting. The test can provide comparatively clean empirical evidence on the capacity of P2P lending to lead to excessive levels of household debt and undermine policy interventions in the credit market. More broadly, it can inform the ongoing debate on FinTech and the regulatory challenges posed by the disintermediation of financial services.
Full paper see Here