Author(s)

Lulu Tan, Qingguo Tang

Corresponding Author

Lulu Tan

ABSTRACT

Online P2P lending is an emerging financial mode that combines the Internet with private lending to provide unsecured lending among individuals. Interest rates and risks determine the behavioral choices and games of lenders and borrowers in the online P2P lending. This paper proposes an evolutionary game model based on lender’s investment behavior and borrower’s credit choice, and uses MATLAB software to carry out numerical simulation. Then it can be found that the evolutionary behavior of online lenders and borrowers is caused by the rate of return and the cost of defaulting. Finally, it is suggest that lenders do not pursue the borrowing target with high interest rates blindly. At the same time, the P2P platform should strengthen the credit review of the borrowers and increase the borrowers’ defaulting cost.

KEYWORDS

Online P2P lending, evolutionary game, behavior of borrowers and lenders