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A Study on the Regulation of the P2P Lending Market - Focused on investor protection -

  • Legal Theory & Practice Review
  • Abbr : LTPR
  • 2019, 7(2), pp.153-178
  • Publisher : The Korea Society for Legal Theory and Practice Inc.
  • Research Area : Social Science > Law
  • Published : May 30, 2019

Lee, Kyung-Min 1

1한려대학교

Candidate

ABSTRACT

P2P lending refer to services that provide necessary funds and loans between individuals on an online platform without going through traditional financial institutions such as banks. Since 2015, the P2P lending market has been rapidly developing around the world, focusing on Britain, the United States and China. The size of the nation's P2P lending market was estimated at 3.17 trillion won as of the end of December last year. The market for P2P lending, developed by meeting the diverse needs of financial users based on fintech technology, is causing losses to investors through moral hazard such as corporate fraud, embezzlement and so-called diversion. Accordingly, there has been an urgent need to impose appropriate regulations to protect investors and other financial consumers. Financial authorities have established and implemented P2P guidelines to regulate the over-growing P2P market. However, due to problems such as fraud and embezzlement by small and medium-sized companies and large companies in 2018, the company has recently revised the guidelines to strengthen investor protection, while trying to foster and develop the market for P2P lending, a fintech financial innovation market. The P2P guideline is only an administrative map and there are limitations in regulating the P2P market. Therefore, the government and industry are constantly raising the need for legislation to replace this guideline. The P2P lending-related regulatory legislation would be rational in the form of separate legislation considering the characteristics of the P2P lending market, and it would be reasonable to ease entry regulations to promote growth in the P2P lending market. And the regulation of business practices should strictly prohibit the strengthening of disclosure regulations, the prohibition of exaggerated announcements, the obligation of explanation, the practice of trustworthiness and conflicts of interest in order to protect investors. In addition, the investment should be limited to general investors and the investment reserve should be managed separately to prevent the investor from incurring moral hazard.

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