Chinese household debt has climbed 40% in the past year alone. To top off that problem, one of the most at risk financial sectors has reached its inevitable end. Peer to peer lenders. Peer to peer lenders collect money from investors and dispense small loans to consumers.
These loans are usually done without collateral, putting the loans at risk of default with no recovery whatsoever. China's peer to peer industry is far bigger than the rest of the world's combined. It had risen 50% just last year alone, totally $215 billion! Interest rates are often as high as 37%.
Investors have been pulling their funds from these P2P lenders for some time, but in recent weeks the volatility got far worse. Countless P2P lenders have closed their doors in the last few weeks. Over 200 since June.
Investors have been pulling funds in massive numbers causing a bank run! 243 online lending platforms have recently gone bust!
- Source, World Alternative Media
