Research on Balance Strategy of Supervision and Incentive of P2P Lending Platform

ABSTRACT

In recent years, numerous risk events of P2P online lending platforms in China have highlighted the importance of government supervision. From the perspective of government dual-objective optimization, two strategies “First regulate and then motivate” and “First motivate and then regulate” are presented, respectively. The timing strategy choice of supervision and incentive of P2P platform is analyzed through game theory modeling and numerical simulation. The results show that the government should first motivate and then regulate the P2P lending platforms; moreover, in the parallel stage of regulatory and incentive mechanism, the government should pay more attention to the economic benefits brought by the P2P lending industry so as to achieve the dual-objective optimization and utility maximization. This paper not only enriches the theoretical literature on management of P2P lending platforms but also provides practical guidance for the government on the supervision of P2P lending industry or other emerging industries.

KEY WORDS:

• financial risks
• financial technology innovation
• incentive
• P2P lending
• supervision

Notes

1. https://www.p2peye.com/.

Additional information

Funding

This work was supported by the National Social Science Foundation of China [13AXW010];the National Key R&D Program of China [2017YFB1400701].