Analysis Of Economics On China's Internet Financial System For Protection Of Consumers' Rights And Interests

Internet finance,as an innovative model of integration of technology and finance,has changed the organizational form and working model of traditional finance.It has lowered transaction costs,met the financial needs of small and micro enterprises and other consumers who possess relatively low disposable income,tapped the potential of the investment and financing,promoted the circulation of capital in the financial market,and improved the development of social economy.However,from another perspective,Internet finance,being new,has led to many cases of violation of rights and interests of its consumers due to lack of effective protective measures in the development of Internet finance,harming consumers' interests and resulting in social and economic disorders.All these also cast a shadow over the progress of Internet finance.In this case,China's Internet financial system for the protection of consumers' rights and interests should be adjusted and improved timely.The adjustment of system must be based on a clear understanding of the current system that the one of protection of the rights and interests of consumers in Internet finance is featured by temporary relief,which can not provide comprehensive protection for consumers' rights and interests in Internet finance.In addition,given the fact that the country has decided to bring Internet finance under comprehensive regulation,how to make the regulations target at shortcomings of financial innovation and overcome the ineffectiveness of protection of consumers' rights and interests solely depended on regulation are also difficulties in the adjustment and improvement of the system.To address the above issues,a theoretical analysis framework of the Internet financial system for the protection of consumers' rights and interests is developed based on relevant theories of economics to make the change of the Internet financial system for the protection of consumers' rights and interests more efficient.The theoretical analysis is based on the premise of the effects of limited rationality of human beings on their behaviors,which makes the theoretical analysis more practical.It is also based on the theory of transaction costs and the theory of institutional changes to establish the effectiveness criteria for Internet financial system for the protection of consumers' rights and interests.In accordance with these theories,after analysis and evaluation of the current system,the author pointed out the inefficiency of the current system in protecting the lawful rights and interests of the consumers in China and gave the answer to the direction of future changes in the system.On the problem of supervision over the Internet financial system for the protection of consumers' rights and interests,the author applies gaming analysis tools to analyze the dynamic evolution between supervising organs,Internet financial platforms and its consumers,proposes the strategy to make the evolution stable and gives clear answers to the three issues that affect the changes of the regulatory system.On this basis,the author proposes some suggestions to improve China's Internet financial system for the protection of consumers' rights and interests after drawing lessons from foreign countries.The framework of the paper is as follows.Chapter 1,Introduction.It mainly includes the background,significance of the selected topic,information,evaluation of the relevant literature reviews at home and abroad,introduction of the ideas and methods used,and summary of the possible innovation points and implications.Chapter 2,Theoretical Framework of Study on Internet Financial System for Protection of Consumers' Rights and Interests.It includes definitions of relevant concepts involved in the study,and a theoretical analysis framework for the study of the protection system.The theory of the study can be summarized into four aspects:(1)the limited rationality theory of human beings on their behavior is used as the hypothesis in the study,so that the research is based on a scientific method;(2)the transaction cost theory is applied,pointing out that the construction of an efficient system can reduce transaction costs and improve the quality of the protection of the rights and interests of Internet financial consumers,which provides guidelines for the establishment of the criteria for the effectiveness of Internet financial system for the protection of consumers' rights and interests;(3)the theory of institutional changes is used for the study of the evolution direction for the Internet financial system for the protection of consumers' rights and interests;(4)theories related to the analysis of economics of regulations and the rational use of incentives are applied to study how the regulatory authorities can intervene in the Internet financial transaction subjects to overcome market malfunction and to maximize social welfare.Chapter 3,Necessities of Improving Protection System for Rights and Interests of Consumers in Internet Finance.The necessity of improving the protection system for the protection of consumers' rights and interests in Internet finance is the focus of this study.Four necessary issues to improve the system are analyzed: improving the position of vulnerable Internet financial consumers,putting an end to the more serious inequality of the transaction parties,decreasing the impacts of the changing Internet financial risk posted on consumers,and compensating the shortcomings of the original protection system.At the same time,the Va R-GRACH model is applied to compare the degree of Internet financial risks in China and the one in the United States,to obtain the conclusion that Chinese consumers face higher Internet financial risks,which further confirms the necessity and urgency of improving the relevant protection system for the protection of rights and interests of Chinese consumers.Chapter 4,Analysis of Effectiveness of Current Protection System for Consumers' Rights and Interests in Internet Finance.After confirming the necessities of improving the Internet financial Internet financial system for the protection of consumers' rights and interests,it is still necessary to design an institution to achieve this goal more efficiently.First,the criteria for the effectiveness of Internet financial system for the protection of consumers' rights and interests are given,which are whether the supply of the system can meet the demands and whether the institutional supply can achieve the Kaldor-Hicks efficiency requirements respectively.Second,based on the above criteria,the current Internet financial system for the protection of consumers' rights and interests is analyzed and evaluated,and the ineffectiveness of the existing system is pointed out to further find out the direction for improvements.Chapter 5,Gaming Analysis of Equilibrium of Regulatory System for Protection of Rights and Interests of Consumers in Internet Finance.Traditional financial regulations fail to effectively regulate the emerging financial innovations such as Internet finance,and to some extent they do not adapt to the current development of Internet finance.Given that the regulatory subjects of Internet finance involve three parties: regulatory authorities,Internet financial platforms and Internet financial consumers,no matter what party takes action,they should take into account the influences of their own factors as well as the influences of other parties.Therefore,by applying the three-party dynamic gaming analysis method,the author explores three core issues that lead to the regulatory dilemma in the protection of consumers' rights and interests in Internet finance: the regulatory subjects,the time and location of regulatory intervention and the regulatory incentives.Through gaming analysis and simulation of relevant evolution,it is concluded that: the enhancement of regulation for the protection of consumers' rights and interests in Internet finance needs to be clarified;regulations should intervene before the development of Internet finance-related industries or businesses;and the regulatory incentives of Internet finance should be diversified by using positive and negative,direct and indirect incentives at the right time to achieve the best regulatory effects.This gaming analysis method tries to solve the key problems that result in the dilemma in regulation and its system,and gives the direction to the adjustment of the regulatory system for the protection of consumers' right and interest in Internet finance.Chapter 6,Suggestions on Improving China's Internet financial system for the protection of consumers' rights and interests.First,it should make it clear that the basic principles of the protection system of consumers' right and interest have their priorities and actions in protection taken should be moderate,and this will be a guidance for the whole process of improving the Internet financial system for the protection of consumers' right and interest.Second,the financial education system for consumers needs to be improved.The importance of Internet financial education and innovation of the concept of Internet financial education should be highlighted and meanwhile,subjects on receiving such education should increase,in particular young people.Moreover,the regulatory system of China's Internet financial system for the protection of consumers' rights and interests should be improved.Internet financial risks that harm consumers' rights and interests should be minimized.A unified and specialized Internet financial consumer protection agency should be established.An access system for Internet financial participants and the exit system for Internet financial platforms in China should be promoted.Last but not the least,a multi-level dispute resolution system should be established.Such a system prioritizes the internal dispute resolution of the Internet financial platforms,mainly deals with the third-party non-litigation disputes and is guaranteed by the judicial litigation.Conclusion: The improvement of the Internet financial system for the protection of rights and interests of consumers is related to both the vital interests of the people and the fairness and justice of the society.The lack of effectiveness of the current system for protecting the rights and interests of consumers of Internet finance and the obvious dependence on the adjustment of the system have failed to provide effective protection for this group of consumers in Internet finance,indicating that there are deficiencies in China's economic governance capacity and governance system,which hinder the further development of Internet finance.Therefore,it is necessary to improve the system of protecting the rights and interests of Internet financial consumers.While promoting prioritized institutional supply for consumers,the government needs to adopt the principle of moderate protection that takes the value of institutional efficiency into account.In this way,the total welfare of society can be maximized to further enhance the overall development of human beings.This is also an inevitable choice to practice institutional self-confidence and promote the modernization of national economic governance system and governance capacity.