P2P maintains its appeal as China redraws financial system
The scandal-hit lending sector could be set for a comeback, buoyed by people’s growing interest in digital banking
As the recent scandals arising from fraudulent peer-to-peer lending practises continue to batter the mainland’s finance industry, uncertainty surrounds the country’s plan to reshape the banking system.
To assuage market fears about a credit crisis following a wave of defaults and collapses involving P2P firms, the authorities have launched a nationwide crackdown on illegal private lending businesses.
It’s a further heavy blow to the P2P sector, which was being touted as a future jewel in the crown of the mainland’s finance internet sector just two years ago.
Strong rumbles of thunder were heard in China after the recent scandal involving the ethics and practises of leading executives at Lending Club, a US-based P2P behemoth launched in 2006 to allow individuals make and apply for loans through an online lending platform.
That sorry saga could also now slow down the initial public offering pace of the mainland’s top P2P players, with pessimistic industry executives predicting that none would be able to raise funds on the US stock market this year, as worries about risk still weigh on investors.
It would be wrong to just simply sign a death warrant on P2P.
“But opening your mind to optimism can help you seize the opportunities ahead,” said Zhejiang Panyuan law firm chief Yan Yipan.