Market uncertainties and too-big-to-fail perception: Evidence from Chinese P2P registration requirements

Zongyuan Li (), Jingya Li and Xiao Chang

Journal of International Financial Markets, Institutions and Money, 2024, vol. 95, issue C

Abstract: The enforcement of peer-to-peer (P2P) registration requirements in mid-2018 triggered a P2P market meltdown, highlighting the inherent challenge faced by Chinese market participants in distinguishing between genuine and fraudulent fintech firms. The difference-in-difference results suggest that the too-big-to-fail (TBTF) perception can effectively halve investor outflows and borrower outflows during periods of uncertainty. Dynamic analysis further validates the parallel-trend assumption and underscores the persistent influence of TBTF perception. Moreover, the empirical findings suggest that, in the face of a market downturn, fintech market participants become unresponsive to all other certification mechanisms, including venture capital participation, custodian banks, and third-party guarantees.

Keywords: Peer-to-peer; Fintech regulations; Too-big-to-fail perception; Market behavior; Market uncertainties; Certification mechanisms (search for similar items in EconPapers)
JEL-codes: D81 G23 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:95:y:2024:i:c:s1042443124000982

DOI: 10.1016/j.intfin.2024.102032

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