Date
27 May 2017
Weeding out shoddy and poorly managed P2P platforms could help make the industry healthier. Photo: internet
Weeding out shoddy and poorly managed P2P platforms could help make the industry healthier. Photo: internet

P2P lending platforms in China: dusk before the dawn?

Bad news continues to surface in China’s peer-to-peer lending sector.

The number of newly reported problematic P2P platforms reached a record 200 last month, more than double the number in April, mainland media reported.

By the end of May, the number of ailing P2P platforms was about 43 percent of the total.

In many cases, the low operating costs of this online lending model were more than offset by shoddy practices and poor management.

Rather than getting a better return, many investors never saw their money again.

Instead of purely matching borrowers and lenders, some P2P firms tried to play the role of a bank but failed to control the risks properly.

There have been numerous cases of fraud, with P2P company owners disappearing with the funds raised from lenders.

The government has begun to tighten up the regulation of the sector and crack down on dubious or unqualified operators, which partly explains why the number of problematic platforms keeps increasing.

In an optimistic view, the P2P industry is undergoing a major shakeup that could leave the surviving players fitter and sounder.

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FL

EJ Insight writer

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