Faculty of Business Administration
FBE Brown Bag Seminar
The optimal interest rates and project screening strategies for online lending platforms
Prof. Yan ZENG
Professor, Lingnan (University) College, Sun Yat-sen University
Date: 02 Dec 2019 (Mon)
Time: 10:00 – 11:00
This paper analyzes the optimal interest rates and project screening strategies for online lending platforms. The transaction process of online lending platforms is first summarized, followed by the construction of a model of the optimal interest rates and project screening strategies for the platforms. The optimal strategy of the model is solved for and analyzed, along with the impact of factors such as platform commission fees and screening costs. Numerical examples are then applied to validate and explain theoretical results. Our results indicate that: (1) the optimal interest rates on online lending platforms equalize borrowing costs for borrowers with external borrowing costs; (2) when the screening ability of online lending platforms attains certain value, an optimal screening strategy exists and is influenced by factors such as interest management fee and cost screening coefficients; (3) proper interest management fee can not only encourage online lending platforms to intensify screening, but also improve their profitability. These results reflect theoretical and applied values of researches on interest pricing of financial information intermediaries and the prevention of moral hazards.
Language of presentation: Mandarin
Prof. Yan ZENG is a professor at Lingnan (University) College, Sun Yat-sen University, China. His research spans a wide field including financial engineering, risk management, insurance and actuarial science, digital financial inclusion, and financial economics. He has held visiting positions at MIT, University of Waterloo, National University of Singapore, and the University of Hong Kong. He has been honored as the “Chief Expert for Major Projects of the National Social Science Fund”, “Zhujiang Scholar of Guangdong Province”, “Top Youth Talent of Guangdong Province”, won the “Henry Fok Education Fund Project”, “System Science and Systems Engineering Science and Technology Award for Young Talents”, and “Chinese Decision Science Award for Young Talents”, and has been nominated the training target for the “Thousand, Hundred, and Ten Project of Guangdong Universities”. He has hosted more than 10 General Programs of National Natural Science Foundation of China and has published over 70 papers in distinguished journals of the field, including Journal of Economic Dynamics and Control, Insurance: Mathematics and Economics, Annals of Operations Research, IEEE Systems Journal, Journal of Optimization Theory and Applications, and Journal of Management Science, 40 of which are included in SCI/SSCI. His research outputs have been awarded the “First Prize of Outstanding Achievements of Philosophy and Social Sciences in Guangdong Province” (province-level), “Third Prize of the Seventh Outstanding Achievements in Scientific Research” (ministry-level), and “Third Prize of the Essay Competition of Forum of Social Security” (ministry-level) hosted by the Ministry of Human Resources and Social Security.