(Bloomberg) -- Chinese peer-to-peer lending platforms keep falling like dominoes, as the government’s crackdown on shadow banking triggers panic in the $192 billion industry.
About 118 platforms have failed through early July 20, according to Shanghai-based Yingcan Group, whose tally for the month had stood at 57 just three days earlier. July’s fail-rate is already the highest in two years with more than a week left, as reports of defaults and frozen funds spook investors.
Jinyinmao, a Shanghai-based P2P lender, was one of the latest platforms to close down this week. Investors are lacking confidence and funds are flowing out “significantly,” the company said in a statement Wednesday.
“Some borrowers have lost their intention and ability to repay their loans, leaving a huge impact on our operations and drying up our liquidity,” Jinyinmao said in the statement.
Authorities began their drive against shadow banks in early 2016 and a record 230 P2P lenders failed in August that year. There’s been renewed pressure in recent months after China’s credit markets tightened and the regulator warned savers that they should be prepared to lose all their money in high-yield products.
China’s P2P platforms have about 50 million registered users and 1.3 trillion yuan ($192 billion) of outstanding loans.
To contact Bloomberg News staff for this story: Alfred Liu in Hong Kong at aliu226@bloomberg.net;Jun Luo in Shanghai at jluo6@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Jeanette Rodrigues
©2018 Bloomberg L.P.
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