China’s fintech credit market is now far and away the world’s largest according to a new report on the global sector from the Bank for International Settlements (BIS).
“In absolute terms, China was by far the largest market in 2016; the United States and the United Kingdom followed at a distance, with other large advanced economies further behind,” said the report “Fintech credit markets around the world: size, drivers and policy issues” published in the September 2018 edition of the BIS Quarterly Review.
The report says that China’s fintech credit volume rose to USD$240.905 billion in 2016 as compared to $5.547 billion in 2013, for annualised growth of 252% across the period.
This compares to a fintech credit volume of $32.414 billion for the United States and $6.068 billion for the United Kingdom in 2016, who saw annualised growth of 88% and 105% respectively during the period from 2013 to 2016.
China’s per capita fintech credit volume was $174.2 in 2016, as compared to $100.2 for the US and $92.4 for the UK.
The report also points out that fintech’s market share is significantly higher in China, with WDZ.J.com estimating that it accounted for about 13% of overall new lending in the first half of 2018, as compared to around 4% of overall net loan originations in the in the US in 2016.
The BIS report says that new lending volumes in China has seen a noticeable decline over the past few quarters, however, in the wake of a wave of closures in the country’s trouble-plagued P2P lending sector.
“In China, the P2P industry has seen a sharp rise in the number of ‘problem platforms’ over recent years,” said the report. “Many platforms there promised unrealistic returns and/or “rigid redemptions”; instances of fraud were also common.
“These issues, together with tighter regulation and measures designed to encourage the exit of non-qualified P2P platforms, contributed to a significant decline in entrants and a surge in platform exits in 2015-16.
“These issues gained widespread media attention in July and August 2018 after a spate of failures.”
According to the report the ratio of new P2P loans to new bank loans in China approached 40% in June 2016, before dropping to under 10% by June 2018.
The ratio of outstanding P2P loans to bank loans was around 1% in June 2018.