INSIGHTS: P2P lending in crisis as regulatory bubble pops

4 min read
Screenshot of Dianrong app, captured May 9, 2019 (Image Credit: TechNode)

Chinese peer-to-peer (P2P) lender Dianrong, once hailed as the “LendingClub of China,” appears to be in crisis following an announcement that it is closing around two-thirds of its offline branches and laying off as many as 2,000 employees. At around the same time, it was accused of falling behind on wages and severance payment. In mid-April, the company reportedly sought $100 million in investment to meet new capital requirements.

“It was not because we did not want to or could not grow. It was because we were told not to grow,” Guo Yuhang, Dianrong’s co-founder, said in a memo addressed to employees, calling for clearer guidance and “a ray of hope for companies that stick to compliance.”

China’s online peer-to-peer lending industry has been in turmoil for the last three years as financial regulators have clamped down as part of “de-risking” efforts.

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