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

Zongyuan Li; Jingya Li; Xiao Chang

doi:10.1016/j.intfin.2024.102032

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

Zongyuan Li
, Jingya Li
, Xiao Chang

Research output: Contribution to a Journal (Peer & Non Peer) › Article › peer-review

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.

Original language	English
Article number	102032
Journal	Journal of International Financial Markets, Institutions and Money
Volume	95
DOIs	https://doi.org/10.1016/j.intfin.2024.102032
Publication status	Published - Sep 2024
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 10 Reduced Inequalities

Keywords

Certification mechanisms
Fintech regulations
Market behavior
Market uncertainties
Peer-to-peer
Too-big-to-fail perception

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10.1016/j.intfin.2024.102032

Cite this

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

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 = "Certification mechanisms, Fintech regulations, Market behavior, Market uncertainties, Peer-to-peer, Too-big-to-fail perception",

author = "Zongyuan Li and Jingya Li and Xiao Chang",

note = "Publisher Copyright: {\textcopyright} 2024 The Authors",

year = "2024",

month = sep,

doi = "10.1016/j.intfin.2024.102032",

language = "English",

volume = "95",

journal = "Journal of International Financial Markets, Institutions and Money",

issn = "1042-4431",

publisher = "Elsevier B.V.",

}

TY - JOUR

T1 - Market uncertainties and too-big-to-fail perception

T2 - Evidence from Chinese P2P registration requirements

AU - Li, Zongyuan

AU - Li, Jingya

AU - Chang, Xiao

PY - 2024/9

Y1 - 2024/9

N2 - 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.

AB - 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.

KW - Certification mechanisms

KW - Fintech regulations

KW - Market behavior

KW - Market uncertainties

KW - Peer-to-peer

KW - Too-big-to-fail perception

UR - https://www.scopus.com/pages/publications/85200256880

U2 - 10.1016/j.intfin.2024.102032

DO - 10.1016/j.intfin.2024.102032

M3 - Article

SN - 1042-4431

VL - 95

JO - Journal of International Financial Markets, Institutions and Money

JF - Journal of International Financial Markets, Institutions and Money

M1 - 102032

ER -

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

Abstract

UN SDGs

Keywords

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