1 The rise of peer - to- peer lending in China : An overview and survey case study About ACCA. ACCA (the Association of Chartered Certified Accountants) is the global body for professional China 's peer -to- peer accountants. It offers business-relevant, first-choice qualifications to people of application, ability and lending sector has ambition around the world who seek a rewarding career in accountancy, finance and management. emerged as the largest and most dynamic ACCA supports its 178,000 members and 455,000. students in 181 countries, helping them to develop online alternative successful careers in accounting and business, with the finance sector in the skills required by employers.
2 ACCA works through a network of 92 offices and centres and more than world. This report 7,110 Approved Employers worldwide, who provide high standards of employee learning and explores the emergence, development. Through its public interest remit, ACCA characteristics and promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy evolving policy continues to grow in reputation and influence. environment of peer -to- Founded in 1904, ACCA has consistently held unique peer lending in China core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring and presents detailed value to economies in all stages of development and seek to develop capacity in the profession and findings from a survey encourage the adoption of global standards.
3 ACCA's of borrowers and core values are aligned to the needs of employers in all sectors and it ensures that through its range of lenders using China 's qualifications, it prepares accountants for business. first online direct ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, peer -to- peer lending innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their provider, Paipaidai. employers. More information is available at: The Association of Chartered Certified Accountants October 2015. Contents About the 4. 1. Executive 5. 2. The growth of peer -to- peer lending in 7.
4 3. Financial innovation and peer -to- peer lending in 9. 4. A typology of China 's peer -to- peer lending 11. 5. Survey findings from Paipaidai borrowers and 15. 6. China 's peer -to- peer lending regulatory 20. 7. 21. Appendix 1: SME classifications in 22. 23. About the authors 4. LUKE DEER ACKNOWLEDGEMENTS. Luke Deer is a post-doctoral research associate The research team would like to thank the industry participants in with the Department of Political Economy at the China who spoke with the research team about the sector and their University of Sydney and a research associate provider details. Special thanks are due to Bai Dengyu at the China with the University of Cambridge Centre for Association of Microfinance (CAM) for sharing his views and arranging Alternative Finance and the Cambridge Judge introductions with industry participants, as well as Zhang Jun and Hu Business School.
5 Luke's research interests are Honghui at Paipaidai, Barry Freeman at Jimubox, Pan Jing at in understanding the emergence and dynamics Dianrong, Tang Nan at RenRenDai and Chen Huan at CreditEase. of alternative finance in China . The research team would particularly like to thank Charlotte Chung JACKSON MI for her support in getting this report under way, Emmanouil Schizas for his feedback on the research proposal and survey design and Jackson Mi is an assistant professor in Walter Wu for arranging interviews in Beijing. finance at the Shanghai Maritime University and a postdoctoral research fellow at Fudan University in Shanghai.
6 Jackson's doctoral research was on informal finance in China and his research interests include micro-finance, peer -to- peer finance and network finance. YU YUXIN. Yu Yuxin is a lecturer in the School of Economics and Finance at Shanghai International Studies University. Yuxin's research interests are in China 's financial markets and macro-economy, and in applications of big data, especially to peer -to- peer finance. He has been a visiting scholar at Virginia Tech (Virginia Polytechnic Institute and State University) in the US. 1. Executive summary 5. China 's peer -to- peer lending market has tend to use more conventional credit China 's peer -to- peer become the largest in the world.
7 The rapid allocation processes. At the same time, growth of online peer -to- peer lending in because of the relative lack of available credit lending market has China has been driven by the supply of funds information, most direct peer -to- peer lending become the largest in from retail investors and by the demand for platforms in China also tend to rely much the world. access to finance from individuals and from more on offline processes. the owners of small and micro businesses. By applying innovations in alternative finance, SURVEY FINDINGS. peer -to- peer lending in China is creating new channels of credit information and increasing This report also presents findings from the access to finance.
8 Over half the borrowers ACCA's own detailed survey of 935 borrowers from peer -to- peer lending providers who and lenders from China 's first online direct were surveyed for this report said they had no peer -to- peer lending company, Paipaidai. previous history of borrowing from traditional Paipaidai started offering unsecured online financial institutions, credit societies or other peer -to- peer micro-loans in 2007, initially to entities. Half the borrowers surveyed also said small e-commerce TaoBao' shops. By 2015, that their main reason for borrowing was to Paipaidai claimed over 1,200,000 active accumulate credit worthiness'. China 's members, borrowers and lenders.
9 Government has supported the continued According to Paipaidai's founders, in the growth of internet finance', including year to mid-2015, 42% of its borrowers peer -to- peer lending and equity were business borrowers and 58% were crowdfunding, while introducing moderately personal borrowers. loose regulatory policies' (PBOC 2015a). INDIVIDUAL BORROWER SURVEY. SIZE AND COMPOSITION OF lending RESPONSES. While as yet there is no verifiable data on the The demand for easier access to credit has volume of peer -to- peer lending in China , by been a key reason for the rapid growth of the end of 2015 it could be as high as peer -to- peer lending in China .
10 According to US$20bn Retail investors are the the survey findings, for example, of those primary funding source for peer -to- peer respondents borrowing through Paipaidai: lending in China . The present research suggests that business borrowers, who are 87% selected the low borrowing mostly owners of small or micro businesses, threshold and easy borrower audit and some owners of medium-sized process as their main reason for enterprises, could make up between 20% borrowing through a peer -to- peer lending and 40% of peer -to- peer lending borrowers provider such as Paipaidai in China . This indicates a much higher share of peer -to- peer business lending in China 56% said that they had no previous than is the case in developed markets, which borrowing history from other financial have been dominated by peer -to- peer institutions such as a traditional banks or consumer credit societies 51% said that their main reason for CREDIT ENVIRONMENT AND DIVERSE.