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Peer-to-peer Lending China’s Third Most Popular Investment Option

| Dec 25, 2015 06:23 AM EST

Peer-to-peer lending is now considered the third most popular choice for investments in China.

A new survey revealed that peer-to-peer lending is now China's third most popular choice for investments of less than 500,000 yuan ($77,150), China Daily reported.

In a poll conducted by P2P lender iqianjin.com and AdMaster, a marketing data technology company, on 5,000 individuals, it was found that 38 percent of them had invested their money in products available on P2P lending platforms, which allow small businesses and individuals to borrow from each other directly.

According to the study, this type of lending has now surpassed bank deposits (37 percent) and stocks (35 percent), and next only to Internet-based investment services (76 percent) and wealth management products sold by commercial banks (40 percent).

The survey showed, however, that 70 percent of investors would still prefer stocks if investing more than 500,000 yuan, compared with 56 percent for P2P.

The report said that the study came despite challenges faced by the P2P lending sector.

According to the report, some 1,157 of the platforms had been having financial problems by the end of November, with either top executives fleeing with investors' money or investors having difficulties withdrawing their cash.

Some 32 more platforms were believed to be in trouble in November, involving 8.27 billion yuan worth of loans and 157,000 investors, according to a monthly report by wangdaizhijia.com.

The survey, however, said that only 12 percent of those surveyed considered the risk involved in P2P sites as "fairly high."

The study showed that 54 percent of P2P lenders said they chose products endorsed by a bank or associated with a known brand to lower the risk, with more than 60 percent including those in their investment portfolios.

Caixin Media reported that the China Banking Regulatory Commission has already completed the basic draft of regulations on the country's peer-to-peer lending sector and a public consultation process on those proposed rules will be launched by the end of this month.

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