Exploring the spatial linkage network of peer-to-peer lending in China

Abstract

The existing literature on peer-to-peer (P2P) lending focuses on default rates, regulation, the relationship with traditional banks, and its impact on individual and corporate lending behavior, but generally ignores its spatial network characteristics. By extracting the spatial location information from the transaction data of Renrendai, this study constructs the spatial linkage network of P2P lending from 2011 to 2015 and employs social network analysis methods to study the evolution characteristics of the network and its driving factors. The main conclusions are as follows: (1) The spatial linkage network of P2P lending went through a process of expansion to contraction, with a decrease in the number of nodes and linkages and a trend of spatial fragmentation in network communities since 2013. (2) There are differences in the evolutionary driving factors for the formation and dissolution of network relationships. The formation of network relationships is based on variables such as the demand for P2P lending and city size, while the dissolution of network relationships is based on the spread of risks and the ability to resist risks. (3) The results demonstrate that proximities differ in their relative importance for linkage formation and dissolution. Geographic proximity plays a significant role in both models, but cultural proximity and inter-city accessibility only matter in the formation model.