Author(s)

Xinyue Hu, Ruilin Chen

Corresponding Author

Xinyue Hu

ABSTRACT

Recently, there are increasing numbers of people who are willing to choose P2P products because of their convenient operation and less strict entry requirements. In addition to the risks of P2P products themselves, individual investors should also deal with the potential default risk of P2P platforms. In this article, a model will be constructed to predict the probability of platform default risk. After the definition of the model and key variables, there will be two case studies to test the feasibility of the model. It is confirmed that whether platforms will have a default in next month can be predicted from the observed information in the past. It also found that those problematic platforms usually have poor historical performance by comparing them with those platforms operating normally. This article will also provide some suggestions for both individual investors and regulators to respond to different status of the platform such as normal operation or having problems.

KEYWORDS

P2P platform, platform default risk, problematic platforms, variable, online lending