Analysis on Risk Appetite of Peer-to-Peer Lending Platforms under Market Competition-Based on Extended Hoteling Model

DOI

10.2991/meess-18.2018.15How to use a DOI?

Keywords

Peer-to-Peer lending, competition, Hoteling model, risk, Nash equilibrium

Abstract

This paper analyzes risk appetite of P2P lending platforms under market competition based on extended Hoteling model. It is shown that there exists a Nash equilibrium in the competition between P2P lending platforms in which all platforms provide only low or high risk bids. Specifically, all platforms will provide high risk bids only when the marginal cost of high risk bids differs greatly between platforms, and provide low risk bids only when the difference is not so obvious. In conclusion, market competition increases risk appetite of P2P lending platforms, which brings about many "problematic platforms" suffering management failures.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Qi Li
AU  - Xiaoyan Wang
PY  - 2018/08
DA  - 2018/08
TI  - Analysis on Risk Appetite of Peer-to-Peer Lending Platforms under Market Competition-Based on Extended Hoteling Model
BT  - Proceedings of the 2018 International Conference on Management, Economics, Education and Social Sciences (MEESS 2018)
PB  - Atlantis Press
SP  - 70
EP  - 76
SN  - 2352-5398
UR  - https://doi.org/10.2991/meess-18.2018.15
DO  - 10.2991/meess-18.2018.15
ID  - Li2018/08
ER  -