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Comparison of risk management for Chinese P2P lenders and P2P lenders from other countries

By comparison, there are some differences between the mechanisms used in reducing information asymmetries by Chinese P2P lenders, as compared to those from other countries. The differences that characterise the self-disclosure by Chinese P2P borrowers and that done by the P2P borrowers from other countries is that they are not compelled to disclose the ownership of assets such as homes and vehicles. The area of difference points out the need to adopt more stringent controls in the P2P lending industry of China; noting that doing so can increase the probability of only recruiting the customers that are more likely to repay their loans. For example, by compelling potential borrowers to provide information about their home ownership, it is more likely to keep away the borrowers with a higher risk of defaulting payment, noting that homeowners are more likely to have secured and paid a home loan successfully (Berger and Frame, 2007, pp. 7). The primary distinction of the higher pressure to disclose the information about home ownership will be an indicator that the customer is more credible, as compared to the view that their assets are used as collateral. Still, the assets that clients self-report can be regarded as a potential security for lending services, which has not been the case in the Chinese P2P lending industry.

 

Lastly, the mean of the response on whether Time saving is one of the advantages of P2P loan was “neutral” which meant that many respondents were uncertain whether time saving is an advantage of P2P loan.  The median was 4 meaning that the respondents agreed that Time saving is one of the advantages of P2P loan. The mode is 3 which means that majority of the respondents were neutral with regard to Time saving being an advantage of P2P loan.

From the above, easier approval and fewer fees are the advantages of P2P loan. On the other hand, the respondents expressed uncertainty as far as th…………………………..

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