An Analysis of the Auditing Mechanism of Online P2P Lending Market

Abstract

Abstract: According to the adverse selection in the implementation of online P2P lending contract under asymmetric information, this paper provides an auditing mechanism based on the optimal contract to improve configuration efficiency of China′s online P2P lending contract. By analyzing incentive feasible lending contract, the output level of arbitrage borrower isn′t distorted, while the output level of arbitrage borrower is distorted, and only the non-arbitrage borrower gets a strictly positive information rent; in order to relax the incentive condition of no-arbitrage borrower, the paper introduces an auditing mechanism to improve the efficiency of resource allocation contract, relaxes the assumption that the lenders promise to implement the mechanism, and the audit mechanism is extended to a model of incomplete commitment; the paper further discusses the impact of the borrower′s distribution probability, the lenders′ auditing and committing probability on the allocative efficiency of online P2P lending contract by using example simulation. This study has some inspiration to build the financial contract of China′s online P2P lending market.

Key words: Internet finance, online P2P lending contract, audit mechanism, allocative efficiency

ZHOU Zheng-long, MA Ben-jiang, HU Feng-ying. An Analysis of the Auditing Mechanism of Online P2P Lending Market[J]. 商业研究.

References

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