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

Li, Zongyuan
; 
Li, Jingya
; 
Chang, Xiao
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Publication Date
2024-08-01
Keywords
Certification mechanisms, Fintech regulations, Market behavior, Market uncertainties, Peer-to-peer, Too-big-to-fail perception
Type
journal article
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Citation
Li, Zongyuan, Li, Jingya, & Chang, Xiao. (2024). Market uncertainties and too-big-to-fail perception: Evidence from Chinese P2P registration requirements. Journal of International Financial Markets, Institutions and Money, 95, 102032. https://doi.org/10.1016/j.intfin.2024.102032
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 participa- tion, custodian banks, and third-party guarantees.
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Publisher
Elsevier
Publisher DOI
https://doi.org/10.1016/j.intfin.2024.102032
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Attribution 4.0 International
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Economics (Scholarly Articles)