The Research On The Development Of China's Internet Financial Industry And Government Regulation

The development of China' s internet financial industry to a certain extent has solved the problems of high transaction costs and asymmetric information that traditional financial institutions are facing and functioned as the supplement and perfection to the traditional finance. The industry has shown explosive growth trend since 2013, which also reflects the lag of China's financial system reform and the urgent needs for interest rates liberalization. The strong development of the internet financial market will have a "catfish effect". By promoting the marketization of interest rate and the expansion of the market boundary, it will have a profound effect on all aspects of our countrys financial industry such as the existing products,business,organization and service, so as to effectively accelerate China's financial deepening and broadening,alleviate the financial restraint and serve the development of real economy in China better.Firstly, this dissertation puts forward the necessity of market access regulation by investigating the market structure of P2P. P2P network lending is one of the fastest growing areas in China' s internet financial industry currently. The market concentration indices calculating on the basis of trading volume, CR4=22.51,CR8=30.61, HHI index =221, indicate that China's P2P market structure is a typical competitive market structure. And since November 2015, HHI index trend line has showed a more ob'vious downward trend,indicating that the degree of competition in the P2P market is gradually increasing. The empirical result asserts a negative correlation between the development speed of P2P industry and the economic performance of the enterprises. It furtherly proves that too high speed of interest rate marketization may lead to excessive competition. In order to compete for customers, P2P platforms may have malicious price or non-price competition behaviors regardless of business risks, such as rigid payment and high interest rate. It implicates that the healthy and orderly development of the P2P industry cannot achieve without reasonable and effective supervision of the state within a certain range .Our government should improve the requirements for market access of P2P industry appropriately to cope with the disorderly competition phenomenon.Secondly, this dissertation argues for the urgency of establishing a credit database of the industry after making a relevant empirical analysis. From the micro perspective an empirical analysis is made on the determinants of borrowers' default in the P2P market by using logistic regression method and 114717 pieces of borrowing records having received fully funding from a China' s lending platform named Peer-to-Peer in the whole year of 2015.The effects of gender, marriage, age, education, income, no mortgage, no car,the amount of loan interest rate, loan term, years of working and credit indicators (including work, income,on-site certification, identity authentication, credit report and specific credit score, a total of 6 index ) on the borrowers' default are studied. The results show that: the impacts of gender and age variables on the P2P loan default is not significant; marital status has a certain influence on the default-the divorce than the unmarried are more likely to default; the lower the academic degree a borrower has,the more likely for him to default. Compared with the borrowers with no house loan and no cars , the default risk for the borrowers with house loan and cars is weaker; the higher the borrowing interest rate is ,the more likely for the borrowers to default. Among the results, the most valuable are as follows: in the first place, credit certification significantly affects the possibility of borrower's default, that is, the higher the credit, the smaller the probability of default. This result demonstrates that the credit reference system can effectively hint the business risk, restrain the behavior of the borrower, reduce the cost of the business and increase theprofitability of the financial institutions. Therefore, our country should take measures as soon as possible to integrate the fragmented credit information of the micro businesses and natural persons scattered in these platforms, establish the credit database shared by all P2P platforms, fill the gaps in the central bank information database, establish an effective and open credit system and lay a solid foundation for lending without any collateral security in the P2P market.The above-mentioned contents from two aspects analyze the internal risks of the P2P industry based on the perspective of meso and micro prudential supervision .However, in order to study the risks of the market fully, it is necessary to analyze the spillover effects of macroeconomic risk from the perspective of macro prudential supervision. Based on the static and dynamic model of AR (n) -XARCH-Copula, an empirical analysis is made on the risk contagion between Chinese P2P market and traditional financial market. The empirical results show that: the P2P market and the stock market in China have a high degree of two-way risk correlation; the P2P market and the inter-bank lending market also have a certain degree of two-way risk correlation, but the degree is somewhat lower. Thus, the risks of the P2P market are not only from the inside of the platforms and borrowers, but also have causal relationships with the outside traditional financial markets such as the capital market and money market respectively.In order to effectively avoid and alleviate the macro and micro risks of P2P market, relevant government regulations are required under the premise of the market economy with Chinese characteristics. But once financial regulatory system is formed, whether valid or not, will continue existing in a certain period and influence subsequent choices of financial regulation system. Therefore, it is now clear that financial regulation must balance risk with innovation in order to maintain financial stability and support economic growth. Excessive regulation may restrain the financial innovation, while absence of regulation may produce industry bubble and market risk. At present, to promote the health development of the internet financial ,the following principles should be held: trading off between the financial innovation and risk management;combining principle regulation with rule regulation; combining classification regulation with coordination regulation; Strengthening the information disclosure and protection of the rights and interests of consumers;Establishing credit system and information sharing system.At the same time, the choice of the internet financial model is related to the future development trend of regional economy, properly selecting internet financial mode can not only speed up the regional financial products promotion and regional economic development by using the internet effectively, but also embody the validity and efficiency of the financial regulation. Preferential selection process of internet financial model is complicated system engineering since there are lots of uncertainty factors and fuzziness. Traditional evaluation method based on deterministic mathematics does not reflect the uncertainty in the process of internet financial mode preferred choice .Aiming at the shortcomings of traditional intuitionistic fuzzy sets using only single information, this dissertation puts forward the evaluation method of intuitionistic fuzzy sets based on mutual participation of expert groups and use the interval intuitionistic fuzzy numbers obtained from combining the evaluation information on the internet financial model by expert groups as the evaluation value of internet financial model, so as to give the preferred evaluation method of internet financial model based on interval intuitionistic fuzzy sets for the reference of our internet financial regulators and the relevant insiders of internet financial industry.