Nonlinear effects of P2P lending on bank loans in a Panel Smooth Transition Regression model

Zan Zhang, Wenjun Hu and Tsangyao Chang

International Review of Economics & Finance, 2019, vol. 59, issue C, 468-473

Abstract: This paper proposes an original framework to determine the impact of Peer to Peer lending on bank loans. Using a Panel Smooth Transition Regression (PSTR) model, the authors, set P2P lending balances as a threshold variable, average P2P lending rate, short-term benchmark lending rate and M2 as control variables, and established province-specific and time-specific coefficients of variables for 8 provinces of China from January 2014 to April 2016. The results show a nonlinear dynamic relationship between P2P lending balances and domestic bank loan balances: there are two threshold values and three regimes. In regime 1 and regime 2, the P2P lending balances are small, P2P lending balances and average P2P lending rate exert a positive impact on domestic bank loan balances, and short-term benchmark lending rate exerts a negative impact on domestic bank loan balances. In regime 3, P2P lending balances are bigger, P2P lending balances and average P2P lending rate exert a negative impact on the domestic bank loan balances, and the short-term benchmark lending rate exerts a positive impact on domestic bank loan balances. M2 has a positive impact on domestic bank loan balances in three regimes. Therefore, the results explained in this paper have important policy implications towards P2P lending in China.

Keywords: P2P lending; Bank loans; Panel smooth transition regression model (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:59:y:2019:i:c:p:468-473

DOI: 10.1016/j.iref.2018.10.010

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