Study on the Effectiveness of Chinese P2P Network Lending Market

With the innovative development of global Internet finance in this decade, the Internet finance in China also develops rapidly in recent years. By the end of June 2015, there are 2028 operating P2P network lending platforms and 786 cumulative questionable platforms in China, the proportion of questionable platforms is on the rise, the loan balance exceeds 200 billion RMB; at present, information disclosure is non-standard and the regulation is imperfect in Chinese P2P network lending market, both will affect the effectiveness of the market. There are no systemic research papers that take "the effectiveness of Chinese P2P network lending market" as title. In this paper, we define the concept of P2P network lending market's effectiveness, take 56139 available transaction listings(which are filtered from 95422 real transaction listings) of Chinese representative P2P network lending platform as a sample and study empirically the effectiveness of Chinese P2P network lending market. Statistical test results show that Chinese P2P network lending market is not a strong form efficient market; econometric results show that Chinese P2P network lending market is not a semi-strong form efficient market, even not a weak form efficient market (therefore not a strong form efficient market); this study also finds that the investors are not completely rational in Chinese P2P network lending market, they prefer to the yields rather than the risk aversion; "better" borrowers tend to borrow money easily, "poor" borrowers tend to borrow money with difficulty.