China's Peer-To-Peer Lenders Are Falling Like Dominoes as Panic Spreads

Re:China's Peer-To-Peer Lenders Are Falling Like Dominoes as... by vram22 on Wednesday August 01, 2018 @05:21PM (#17667110)

>Bank do refuse to lend to large segments of the population which can be lent to profitably.

>In China, part of the reason is caps on loan interest rates.

How exactly is that the reason? I thought about it, and guessed that you may mean that it is because lenders cannot charge high interest rates to those segments, but if they are a risk anyway (guessing because poor or have unpredictable income), why would banks want to lend to them? I mean, even if banks were allowed to charge higher interest, the borrowers could default on the principal or the interest, right? [Not a financial expert here.]

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Re:China's Peer-To-Peer Lenders Are Falling Like Dominoes as... by alvah on Wednesday August 01, 2018 @07:28PM (#17667994)

Because the risk of default is not binary, it's on a sliding scale. If the banks are not allowed to charge enough interest to cover the risk of default, the loan will not be made.

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Re:China's Peer-To-Peer Lenders Are Falling Like Dominoes as... by vram22 on Thursday August 02, 2018 @10:27AM (#17671619)

Got it now, thanks. Like actuarial principles for insurance, I guess.

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