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

Author

Listed:
  • Jiang, Jinglin
  • Liao, Li
  • Wang, Zhengwei
  • Zhang, Xiaoyan
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.

Suggested Citation

  • Jiang, Jinglin & Liao, Li & Wang, Zhengwei & Zhang, Xiaoyan, 2021. "Government Affiliation and Peer-To-Peer Lending Platforms in China," Journal of Empirical Finance, Elsevier, vol. 62(C), pages 87-106.
    • Handle: RePEc:eee:empfin:v:62:y:2021:i:c:p:87-106
    DOI: 10.1016/j.jempfin.2021.02.004
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    More about this item

    Keywords

    Peer-to-peer lending platforms; Fintech; Government affiliation; State-owned enterprise; Emerging markets;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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