Meanwhile in China, the biggest market for P2P lenders, new rules could see the vast majority of them fail, according to an official report.

Shares in a number of P2P lending platforms have dropped as high profile players like US-based LendingClub and On Deck Capital have faced numerous difficulties. Investors previously attracted to the sector are now rethinking their approach, reports the WSJ.

The lending platforms are finding it difficult to bring down the default rates of their borrowers - insisting on more stringent credit standards and a more thorough application process would make the challenger lenders less attractive in comparison to the incumbent, traditinal lenders.

It is a similar gloomy forecast in China. The study, published by multiple agencies including the Beijing Bureau of Financial Work and Nanhu Internet Finance Institute, forecasts big problems for the sector because it ihas been largely unregualted till now. But a planned clampdown from Chnese authorities could see as any as nine out of ten struggle to survive in 2017.

"The wild growth of online lending in recent years exposed a multitude of problems," it states. "P2P operators and regulators will face stern challenges to ensure a healthy growth of the P2P sector."

There are almost 5,000 P2P lenders operating in China, the most in any country, but as few as 500 are expected to stay afloat in light of the new measures intorduced in late 2016. These include the mandatory appointment of a custodian bank, full disclosure of the use of deposits and a regulatory review.Any platforms that fail to pass this review will be forced to liquidate.

The review was prompted by fears of widespread fraud in the sector - one of the largest platforms, Ezubao, was found to have defrauded more than 1 million investors of more than $14 billion.

In addition, there are also concerns at the high level of outstanding credit in the sector - online data provider wdzj.com estimates that this exceeded 800 billion yuan ($116 billion) in 2016.