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In Peer-to-Peer Lending, Size Matters

By Han Yi and Dong Tongjian
Hongling Capital is exiting the peer-to-peer (P2P) lending business, admitting that its business model — which includes large loans — doesn't work. Photo: Visual China
Hongling Capital is exiting the peer-to-peer (P2P) lending business, admitting that its business model — which includes large loans — doesn't work. Photo: Visual China

Hongling Capital knows when to call it quits.

This 8-year-old Chinese online peer-to-peer (P2P) lender, unlike other microloan-focused players, rose to fame by granting big-ticket loans of as much as 400 million yuan ($60 million) to a single corporate borrower.

But several massive defaults and a looming 200,000-yuan cap per loan have pushed China’s largest P2P lender over the edge. Late last month, Hongling declared that its P2P business model doesn’t work, and the company will exit the industry in three years.

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