Abstract
We construct a stochastic model to study the fund matching between fund-raisers and investors in a financing platform. The raising time is assumed to be a random variable. Then, there is a successful transaction probability that the fund matching is realized. Meanwhile, the interest and the commission rate that the platform earns affect the value of the probability. The platform maximizes its revenue by adjusting the commission rate. We find that the optimal commission rate decreases in investment time. However, when the time interval between two adjacent investments obeys the general distribution, the optimal commission rate increases in the annual interest rate. Besides, we extend the model into a duopoly case in which two fund-raisers compete for customers in the same platform by deciding their own interest rate. Due to lacking competition, the optimal interest rate in the monopoly case is lower than that in the duopoly case. Because the interest rate is the cost for the fund-raiser, the expected profit of the fund-raiser in the monopoly is higher than the expected profit of each fund-raiser in the duopoly case but lower than the total expected profit of two fund-raisers. The platform should choose some small loans as far as possible. The loans with smaller amount are easier for the platform to complete fundraising. For those large loans, the platform should try to ask for higher interest rates or more sufficient time to raise funds.
Highlights
With the world entering the information age and the rapid development of the Internet, Internet finance has gradually received people’s attention
Mathematical Problems in Engineering e following are our main contributions to the literature: (1) We construct a stochastic model to study the fund matching between fund-raisers and investors in a financing platform. e raising time is assumed to be a random variable. en, there is a successful transaction probability that the fund matching is realized
The interest and the commission rates that the platform earns affect the value of the probability. e platform maximizes its revenue by adjusting the commission rate
Summary
With the world entering the information age and the rapid development of the Internet, Internet finance has gradually received people’s attention. (2) When the raising time is uniformly distributed, we find that the optimal commission rate increases in the probability of borrower default but decreases in the annual interest rate and the loan duration. We extend the model into a more general one, in which the platform needs more than one investor to raise enough money for the borrower, and the time interval between two adjacent investments obeys the general distribution. (3) Besides, we extend the model into a duopoly case in which two fund-raisers compete for customers in the same platform by deciding their own interest rate. P2P loan objects are mainly individuals, and the general platform does not require borrowers to provide a guarantee, so the risk of lending increases [6]. We conclude that platforms with public ownership may have greater financial stability [12]
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