58 billion Yuan ($ 9,5 billion) is the estimated market value of P2P lending in China as of last August. Certainly, a lot smaller than the UK’s or the US’s. However, considering that this value increased almost 90% since January 2014 and that it has already surpassed the value estimates made at the beginning of the year, it is clear that the phenomenon is growing at fast speed.
However which direction these new rules will take remains unknown and some are worried that, while they could drive some players underground, they would also push others to try to find ways around them to survive. In fact, the sector has been developing recently in a completely unguided manner, with no requirement of any kind. As a consequence platforms have implemented completely different business models, from online to offline P2P lending, from collateralized to uncollateralized loans. This wild and free field has also been a reason of complaint among microfinance companies, which are instead regulated and licensed by the relevant regulator.
It is unlikely that the Chinese regulator will be able to produce a regulation that keeps into account all these different P2P lending realities that have developed so far. And this is why many are afraid that the upcoming rules may be a great pushback for this new financial sector. Although at the moment it is just rumors, we are supportive of the idea that a set of rules would help the market to establish and grow. Hopefully, though, the regulation won’t be so strict to strangle the great potential of P2P lending in China.
Weinland, D. (2014). P2P lenders await new regulations from Beijing. South China Morning Post.
Image credit to: Masha Krasnova-Shabaeva http://bit.ly/15Mhveo
About the author – Irene TorderaBorn and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.