Analysis on optimal market structure and supervision mode of online P2P lending: Based on evolutionary game theory in different supervision stages

Online P2P lending in China is facing a series of challenges such as poor industry self-discipline, platforms collapse frequently and industry risk accumulation. It is significant to regulate the online P2P lending market through external supervision. In this paper, online P2P lending development is divided into two periods over the last decade, loose supervision period and intensive supervision period. The evolutionary game theoretic approach is used to investigate the impact of supervision on enterprise behavior and market structure. Under the conditions of strengthened supervision and industry contraction, this paper attempts to explore the evolution and optimal structure of online P2P lending market. The research results show that leading style enterprises have competitive advantages to maintain dominant position with strengthened supervision. In contrast, satellite style enterprises are more difficult to expand market share and meet regulatory standards thus finally quit the market. With the increase of market concentration, the optimal market structure converts from low-concentrated competitive market to oligopolistic market dominated by leading style enterprises.