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A default penalty model based on C2VP2C mode for internet financial platforms in Chinese market

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Abstract

The present study proposes a novel customer-to-virtual-product-to-customer (C2VP2C) mode of a loan default penalty model for Internet financial platforms (IFPs) in the Chinese market. The C2VP2C mode is developed based on the traditional peer-to-peer (P2P) business model and introduces IFP virtual products to risk control and loan matching. A loan default penalty model and a punishment mechanism of IFP borrowers in the C2VP2C mode have been developed. Firstly, the transaction mode and operational process of the C2VP2C mode of IFPs were established and three levels of loan matching space were constructed. The study established a penalty model for delinquent borrowers to assess their willingness to repay, and investigated the penalty intensity for defaults. The results show that a greater the penalty coefficient would result in more serious penalties, and with the delay of the repayment, the penalty coefficient showed less changes. The proposed method has important practical value and scientific significance for reducing the default rate of IFP borrowers and improving the loan repayment rate.

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Acknowledgements

This research was supported by the National Natural Science Foundation of China grant number 91646112; The Key Programmes of the Science and Technology Department of Guangdong Province grant number 2016A020224001.

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Authors and Affiliations

  1. Institute of Finance Engineering at School of Management/School of Emergency Management, Jinan University, Guangzhou, 510632, China

    Sulin Pang & Huili Xian

  2. Guangdong Emergency Technology Research Center of Risk Evaluation and Prewarning ON Public Network Security, Guangzhou, 510632, China

    Sulin Pang & Huili Xian

  3. Macau Chinese Bank, Macao, 999078, China

    Rongzhou Li

Authors
  1. Sulin Pang
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  2. Huili Xian
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  3. Rongzhou Li
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Correspondence to Sulin Pang.

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Pang, S., Xian, H. & Li, R. A default penalty model based on C2VP2C mode for internet financial platforms in Chinese market. Electron Commer Res 22, 485–511 (2022). https://doi.org/10.1007/s10660-020-09436-x

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