Feasibility and development analysis of P2P online lending platforms in Taiwan

Abstract

After the financial crisis, the governments have been stricter in regulating the financial systems so that banks to raise their lending thresholds. Unmet demands for loans coupled with the matured techniques impel the emergence of Peer-to-Peer (P2P) lending. The first online P2P lending platform, Zopa, was established in 2005. The Peer-to-Peer Finance Association (P2PFA) and the Financial Conduct Authority (FCA) promote the steady growth in UK P2P lending marketplace together. Prosper and Lending Club are two major P2P lending platforms. After the financial crisis, Securities and Exchange Commission (SEC) has strengthened regulations on the US P2P lending corporations. In this paper, we discuss the development and supervision process of P2P lending in the UK and US, as well as Taiwan lending marketplace on the aspects of environmental and legal. Further, we examine the impact of 4 interested parties - borrowers, investors, banks and P2P lending platforms, and whether the development of P2P lending is suitable for Taiwan. In conclusion, the development of P2P lending in Taiwan partly benefits the interested parties. Hence, this paper suggests that the P2P lending platforms should readjust the operational strategies to fit Taiwan’s social culture, encouraging the government to extend the related regulations, and partnered or competing healthily with banks in order to develop sustainably.