Oct 16, 2018 (China Knowledge) - The Chinese peer-to-peer (P2P) lending industry, worth USD 120 billion, has been lightly -regulated with a high risk and return profile. In July, 114 P2P platforms in China were shut down without warning or have their fund withdrawals suspended due to liquidity problems, as reported by an online Chinese P2P data provider Wangdaizhijia.
The government crackdown on debt and financial risk in past year has brought about a new wave of defaults, with industry executives fleeing aboard, and ordinary Chinese people left to deal with the scorch.
Chinese regulators are looking to strengthen the P2P industry, with stricter guidelines and laws to govern it. Regulators will hand out licenses over the next year for companies that meet the strict criteria drawn up by the officials. This move has forced smaller companies which failed to meet the criteria out of the industry.
According to an industry intelligence company, WDZJ.com, currently, there are roughly 1,530 P2P companies operating in China. The P2P thrive well in China, as ordinary citizens deemed of risky credit can borrow money easily, and others can invest their savings for potential return with just one click.
Chinese P2P companies have also been going public in order to raise funds to revolutionize its operation. Yirendai and Hexindai are one of those who have went public on the NYSE and Nasdaq stock exchange respectively.
Yirendai Ltd <YRD:NYSE> is currently trading at USD 16.28, closing at 1.12% higher while Hexindai Inc <HX:NASDAQ> is currently trading at USD 7.80, closing at 4.84%.
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