Evolutionary game analysis of FinTech transformation: A social co-governance pattern of peer-to-peer lending market in China.

Benign exit has become the main theme of the transformation in China's peer-to-peer (P2P) lending industry. To protect the interests of investors in the benign exit process, this paper proposes a social co-governance pattern using a tripartite evolutionary game model to capture the behavior strategies of P2P lending platforms, investors, and financial regulators. The results demonstrate that there are four evolutionary stable strategies for the game model, among which the positive disposal of P2P lending platforms, the participation of the investors, and the co-governance policy of financial regulators is the optimal strategy in the benign exit process. The results also show that the initial proportion of P2P lending platforms, investors, and financial regulators would significantly affect the convergence speed of the evolutionary stable strategy. The proposed social co-governance pattern would effectively safeguard the interests of investors if incentive, penalty, and reputation mechanisms are well-designed. This paper provides in-depth implications for protecting investors' interests in the transformation of the P2P lending industry and enhancing the sustainable development of the FinTech industry.