The P2P Online Lending Risk Controls -- Based on the Case Study of rrxxd.com

Abstract

P2P online lending is an emerging industry, which has no industry standard, no barriers to entry and hardly any regulatory agency in China. With the development of P2P lending in China, many problems gradually exposed, including legal gaps, lacking of supervision, weak ability of risk control and etc. Compared with traditional loan and investment through banks and other financial institution, P2P online lending is more convenient for investor to get more benefit and is easier for many small and micro companies to get financing. However, the risks and negative effects of the industry have bad impacts on the development of
the industry and have caused extensive concern of the society.

The main purpose of this paper is to study the risk controls of P2P lending. It is analyzed from four aspects, which are the development status of P2P platform, operation modes, risk types and regulatory conditions in China. To be practical,
this paper selects the rrxxd.com online lending platform as a case to study the risk controls. The background, operation mode and operation condition of the rrxxd.com platform are introduced in detail. This paper establishes a hierarchical structure model through analytic hierarchy process to get the weight of each index. Then it calculates the risk scores of the rrxxd.com platform and other 24 typical P2P platforms, and compares them with each other. According to the risk scores and index coefficient of the rrxxd.com platform, the risk of the platform will be analyzed and the risk controls will be proposed.