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Fuze Effect: A Landmine in the Way of Sustainable Development of FinTech—The Lessons from the Peer-To-Peer Risk Outbreak

Author

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  • Na Sun

    (Business School, University of Shanghai for Science and Technology, Shanghai 200093, China
    School of Early Childhood Education, Shanghai Normal University Tianhua College, Shanghai 201815, China)

  • Liangrong Song

    (Business School, University of Shanghai for Science and Technology, Shanghai 200093, China)

  • Yan Sun

    (School of Computer Engineering and Science, Shanghai University, Shanghai 200444, China
    Shanghai Institute for Advanced Communication and Data Science, Shanghai 200444, China)

Abstract

Based on the data of peer-to-peer (P2P) platforms, employing the ARIMAX model and analyzing the risk outbreak process of P2P platforms, we find that the risk outbreak of P2P is a spreading process from weak to strong along the “qualification chain” of the platforms. This risk outbreak process along the qualification chain is dubbed the “fuze effect” in this paper as the process is similar to that of the fuze detonating explosives. This finding implies that the real risk comes from the uneven quality of P2P platforms, which is different from the dominant opinion that of their “credit enhancement services”. Our further study suggests that the fuze effect comes from deadweight cost caused by market competition. This study is of significance for risk prevention in emerging industries such as FinTech; that is, for the sake of sustainable development of emerging industries, the government must be vigilant about the fuze effect.

Suggested Citation

  • Na Sun & Liangrong Song & Yan Sun, 2021. "Fuze Effect: A Landmine in the Way of Sustainable Development of FinTech—The Lessons from the Peer-To-Peer Risk Outbreak," Sustainability, MDPI, vol. 13(4), pages 1-21, February.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:4:p:1647-:d:492811
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