Study from Gollier Aghion and DE (2000), and Prescott (1997) found that when the borrowers freely form a loan group in which all members are bound together, they can guarantee for others in the group (i.e.,if there are any members fail to repay the loan, other members will pay), if one of the team members being blacklisted, the entire team will be blacklisted, to some extent, the risk of adverse selection and moral hazard can be reduced in this way. Furthermore, people with good credit are not willing to form a group with people with poor credit, which will bring out obvious credit gap between two kinds of groups. Borrowers with poor credit and qualifications will form a team, and borrowers with good credit and qualifications form a team separately, due to the two extremes exist at the same time, it causes the high level of interest rates, It also raises the interest

rates of groups with high credit levels. But the cost of credit evaluation of the team is much lower than the cost of inpidual people. It is visible that the policy is a coin with two sides, we should avoid disadvantages. In P2P lending network, although borrowing groups are not fully realized due to the fact that deviation exists in the understanding of each other’s credit and financial situation, we should notice that group lending is more likely to be the future of P2P lending market.

From the reviews above of the research on P2P network, it can be seen that the theoretical research of P2P loans in foreign countries mainly focused on the problems of information asymmetry on lending, the role of intermediary institutions in lending activity and how to improve the success rate of borrowing by forming borrowing groups. It is concluded that the intermediary role P2P lending network platform play in trading activities can effectively reduce the information

asymmetry problems between borrowers and lenders, and borrowers can improve the success rate of borrowing by forming certain groups. Foreign scholars concluded that some hard information will affect the borrowing rate through empirical research on the public data available on the Prosper. In addition, the soft information of borrowers will also have influence on it.

2. THE RELATED RESEARCH IN CHINA

Drawing lessons of mature cases from P2P network platform abroad, the first P2P credit network in China called PPDAI which established in August 2007, headquartered in Shanghai. PPDAI is a pure intermediary type network platform, which mainly borrowed from the success of Prosper. Domestic P2P network platform sprung up over the following years, after years of trial and development, management mode is gradually mature in the groping process. There are also some other successful domestic credit network platforms such as Credit Ease, a compound intermediary borrowing lessons from Zopa (Zhang, 2013), QIFANG, the first network dedicated to student loans, 51Give, providing micro-finance services to farmers and students, Wokai, concentrating services on farmers. Both 51Give and Wokai are founded by foreigners and cooperated with small local credit institutions and check on the credibility of the borrowers. Some of the P2P lending sites which have larger influences are Hongling Captical, CreditEase, DAIBANG, Renrendai etc. The following articles focus on domestic literature research about P2P lending.

2.1  The Early Theoretical Study

Domestic study on P2P lending network started relatively late, and concentrated on the introduction of the net loan, comparison between operation modes, etc. (Wang, 2012) (Chen, 2010) (Wang, Chen, Xing, 2009) (Sun, 2010) (Xin, 2009) (Zhang, 2010), among which the most comprehensive generalization is given by Chen. Chen (2010) illustrated four types of network credit business model: first, based on enterprise network behavior parameters, banks carry out comprehensive credit for certain enterprise and then the enterprise make a unsecured loan with its risk borne by the two parties jointly. Second, the credit network platform becomes an outsourcing service provider in the front process for bank financial business loan. In other words, the net companies work with domestic bank credit enterprise to bring out a new concept “loan supermarket”. Third, typical P2P lending patterns. Fourth, loan network community specially provides loans for students. Followed are some system studies. Wu and Cao (2011) put forward several suggestions to strengthen the regulation of P2P lending platform, including: (a) the perfection of the mechanism of user identification; (b) strengthen the capital management mechanism; (c) establish and improve the anti-money laundering system; (d) accelerate the construction of credit rating system; (e) improve safety technology of P2P web site. Huang and Ji (2012) put forward that several network platforms set up a unified borrower credit rating system and introduce insurance system and other measures to control the current risk in net risk. They propose that several common network  lending platform set up unified borrower credit rating system to control the current risk in network loan. You and Zhang (2010) found that the foreign advanced computer technology, a sound credit system, perfect legal system provide support to the mature development of net loans after the comparison between the P2P network credit platforms at home and abroad.