Regulatory Developments in Peer-to-Peer (P2P) Lending to Combat Frauds

Abstract

Internet lending is a unique form of the credit market for bypassing banks in which borrowers generate online microloans without leverage or intermediation from financial institutions. Unlike the UK and the US, the Chinese P2P lending market is broader. Although the regulations concerning P2P lending are more comprehensive since 2015, there remains some regulatory gaps and failures, thus identifying these remaining regulatory gaps can help perfect the regulatory framework. This chapter provides a more detailed analysis and an examination of the Chinese legal framework related to P2P lending and identifying the vacuums in the existing framework. The theoretical contribution is primarily to the implications of the latest development of regulatory changes and the established individual credit reference system in China. Furthermore, the chapter also discovered three new regulatory vacuums (i.e., platform exit, a case report of financial crime, and consumer education), thus concluding with detailed insights on future approach towards perfecting the regulatory framework.