Research On Internet Financial Industry And Its Influence On Traditional Financial Shock

In recent years, with the rapid development of the Internet and the mobile internet, people’s mindsets, lifestyles and actual business forms are remarkably changed, even the financial industry, praised as’Pearl on Crown’in modern business industry, have to face the impact and embrace opportunity both brought by Internet Finance. On the one hand, Internet Finance is invading and encroaching the domain once occupied by traditional finance, be it on specific financial products or businesses, even some segmentation fields are reshaped, while on the other, Internet Finance is creating numerous breath-taking miracles:market value of Alibaba reaches 230 billion dollars on the first day of Alibaba going public, exceeding Petrochina and China Mobile; thanks to balance treasure, Tianhong Asset, which was consigned to oblivion, ranks fourth in the world and first in China among fund companies and possesses approximately 600 billion RMB at its peaks; eastmoney.com, known as Charles Schwab in China, achieves fund sales of 200 billions in 2014 by means of traffic import of portal webs and’Guba’social networks. All these achievement are hardly possible in the times of traditional finance. The thesis aims at panoramically revealing how Internet Finance invades the domain of traditional finance and impacts and influences specific product forms, business processes, segmentation fields, supervision, risk control and even monetary policies and credit risks and the range and degree of the influences as much as possible. Meanwhile, the thesis tries to reflect how Internet Finance and Finance Internet move in opposite positions and the historical trend that the Internet Finance and the Finance Internet will finally merge. This historical trend exerts rather positive influences on promoting financial disintermediation, a GSP (generalised system of preferences) financial system and financial democratization.The thesis manages to multidimensionally display the impact and influence of the Internet Finance on traditional finance in aspect of thesis layout and meanwhile tries to avoid generally describe the infiltration and transformation of every business and segmentation fields of the traditional finance caused by the Internet Finance. The thesis firstly analyzes development situations, characteristics and trends of the Internet Finance abroad, further analyzes and illustrate specific business formats, competition patterns and development directions of the Internet Finance at home and gradually relates to the strategic layers of supervision and risk control systems, traditional monetary polices, interest rate marketization and financial institution credit risks and the like from tactic layers of products, techniques and business processes. Furthermore, empirical study of two chapters are utilized in the thesis to examine the influences of the Internet Finance on the traditional monetary polices and credit risks to achieve the combination of normative research and empirical study of the whole thesis and combination of induction and deduction and quantitative analysis and further to avoid two harmful trends of general Internet Finance research theses, i.e., lack of academic principle depths due to too much event and factual description and comments and obscurity and rigidity caused by too much emphasis on empirical study and quantitative analysis. The thesis well balances the relationship between normative research and empirical study and manages to achieve breadth and depth.Regarding methodology, quantitative analysis method, historical research method, logic reasoning and case study are utilized in the thesis. Particularly, measurement models applied in Chapter Six and Chapter Eight deserve to be highlighted. Due to short-time development of the Internet Finance at home, relatively large deviations exist in statistical caliber. In order to overcome the technical shortcomings might caused in regression analysis due to low degree and short duration of data formatting, the most maturely-developed third party payment data with the highest formatting degree is utilized as the main observation objects and taken as wind vane for measuring overall vitality of the Internet Finance industry in data processing of the thesis. Despite the fact that P2P and petty loan data based on E-commerce platforms is significant possible independent variable options, considering the small scale, the author of the thesis rejects the P2P and petty loan data based on E-commerce platforms during data series selection as’noise’. Meanwhile, normally-used annual data series are changed into quarterly data series; therefore, possible technical shortcomings in regression analysis can be effectively overcome. In a modeling process of a regression model, natural logarithms are introduced either in examination of influences of the Internet Finance on MO, M1 and M2 or on financial institution credit risks to mainly avoid influences of absolute figure increase on regression results and meanwhile to reflect structural change factors.The thesis is mainly based on four theoretical bases in studying and analyzing the impact and influences of the Internet Finance on traditional finance:the first is the renowned’Long Tail Theory’by Chris Anderson, which is essence of the Internet business model and is also applicable to the Internet Finance industry; the second is Coase Theorem, and the theory, put forward by Ronald Coase, that zero-cost or low-cost transaction reaches Pareto Optimality under the condition of clearly established ownership perfectly accords with the important function of the Internet Finance in promoting optimal matching of financial market factors; the third is big data theory by Viktor Mayer-Schonberger and data intelligent mining theory by Liang Xun, and the two theories combines organically to lay foundation for customer precise localization and precise marketing at the time of mass data and powerfully illustrate development mechanisms and power source of Internet Finance industry forms derived from E-commerce platforms and social networks; the fourth is industry convergence, industry transboundary and industry development theories put forward by American scholar Greenstei and Khanna and Japanese scholar Masu Uekusa, and their theories illustrate how industry boundary gradually disappears in a post-industrial age and how the convergence among industries promotes market competition. All these theories are in accordance with the current mutual infiltration and promotion status of the Internet Finance and the traditional finance. Certainly, since the current Internet Finance study mushrooms, some research achievements and opinions of domestic specialists in theory field and market celebrities are also substantially quoted in the thesis, for example, the dissertation of Xie Ping on revolutionary function of the Internet Finance industry, suggestions of Ba Shusong on development trend and supervision of the Internet Finance, theory of Liang Xun on Internet Finance system design and data mining, theory and practice summary of Liang Xiaochuan related to Internet Finance service based on Alibaba practice.The conclusions of the thesis mainly reflect the impact and influences of the Internet Finance on traditional finance in a concentrated mode from four aspects. Firstly, the infiltration, transformation, even reshaping and subversion of the Internet Finance on specific businesses and segmentation fields of traditional finance, particularly on the field of third party payment-volume of business transactions reached a striking astronomical figure of 23 trillion in 2014 and is expected to reach a striking astronomical figure of 30 trillion this year. Besides, in recent years, the fields of Internet securities companies, Internet financial management platforms and Internet insurance increase geometrically. Secondly, the influences of the Internet Finance on monetary policy-a measurement model is utilized and third party payment data serving as benchmark indexes of Internet Finance vitality is selected in the thesis for examining influence status of "monetary retardation effect’ on M0, M1 and M2. and thus conclusions that the Internet Finance exerts remarkable influences on MO and Ml and inconspicuous influences on M2. Thirdly, the influences of Internet Finance on financial institution credit risks-a measurement model and least square method OLS and CHOW are utilized in the thesis for examining and determining that year 2006 is a time catastrophe point, and finally a dummy variable method is utilized for drawing the conclusion that after year 2006, with the booming development of the Internet Finance, despite credit risks of financial mechanisms are on the decline on the whole, the credit risk amplification function of the Internet Finance is remarkable. Fourthly, the impact of the Internet Finance on financial supervision and risk control systems-the impact of the Internet Finance on traditional financial supervision and risk control systems is multi-directional, and the Internet Finance poses great challenge to supervision concepts and principals, organizational systems and specific techniques. Prudential supervision principals based on Basel Agreement and of’one bank and three commissions’tradition also loosened, and four departments specifically adjust functional division and organizational structures on the Internet Finance. For example, the central bank is mainly responsible for supervision and risk control of the third party payment while the China Banking Regulatory Commission sets up a special department to monitor the development of P2P Internet Load.At the end of the thesis, the thesis also provides corresponding policy suggestions besides summarizing research conclusions as the established practice. It is worthwhile to highlight that the proposal of wishing to endow Internet enterprises with bank licenses put forward by the author at the beginning of the thesis and the suggestion of fully exerting big data advantages of large E-commerce platforms and social networks to carry out credit investigation exploration are achieve before the thesis ends. In the first place, Alibaba Internet Commerce Bank and Tencent Webank are approved, furthermore, this year, the central bank further permit eight organizations such as Alibaba, Ping’an and Lacarra to carry out personal credit businesses. Besides, considering the ascendant development of Internet Finance development, the author also puts forward some dauntless prediction and deduction on the development trend and evolution path of the Internet Finance at the end of the thesis. One of the most importance views is that the Internet Finance and the traditional finance Internet will move in opposite directions. Of course, the thesis also admits that despite that the Internet Finance is innately provided with revolutionary genes, it cannot get rid of the fate of being modified in foreseeable future because whether from the newest development trend from European and American countries or newest trend in the domestic industry, signs of subverting existing financial ecology cannot be seen for the time being. However, there is no denying that, as a novel trendency power, the Internet Finance cannot be stopped and is destined to exert significant and far-reaching influences on future financial forms, business models and lifestyles of people.