Internet Finance And Financial Inclusion

Internet finance is the newest model in the era of financial innovation, firmly combining internet technology, communication means and traditional finance together. Due to the information processing model and resource allocation model which are based on the internet technology, internet finance cuts down the high cost of transaction as well as alleviates the level of information asymmetry while it performs the following functions:efficient cash concentration with lower cost, fragmentary finance customized for the scattered funds, and smallµenterprises’loans with lower default rates. All the features above just correspond to the idea of the financial inclusion-ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and remote-area groups in particular, at an affordable cost in a fair and transparent manner by regulated main stream institutional players. In this context where the internet finance promotes the level of financial inclusion both in terms of depth and width, it can be summarized that, taking the financial inclusion as a starting point, exploring the development of internet finance emerges as a critical issue and deserves a careful independent assessment in China’s financial innovation and economic development.This paper first allows for a theoretic analysis of the internet finance and financial inclusion, including the conceptions and relevant economic theories. The focus of the context is placed on the examination of the links between internet finance and financial inclusion. It clearly appears that, from the width term, internet finance brings Information Communication Technology with traditional financial services together in order to provide more groups with much lower transaction cost; also from the depth term, due to the adoption of mobile payment and information processing model based on the technology, the high-tech financial services mitigate the problem of information asymmetry. Based on the quantitative analysis of the ICT data, conclusion comes that the fast development of internet technology raises the level of financial inclusion and then promotes the economic development. As a result, we can conclude that the internet finance will contribute to mitigate the financial exclusion and raise up the efficiency of the social fund allocation, in other words, it is one of the primary impetus behind China’s inclusive economic development.The creative point of this paper focuses on the relationship of the internet finance and financial inclusion. Besides this, in order to give empirical support on the relationship of the ICT, financial inclusion and economic growth, I use the panel data analysis method. As the latest pattern of financial innovation, internet finance definitely brings about attacks and challenges, however, how to lead it to perform healthier to agree with the conception of financial inclusion is a critical issue and deserves being paid careful attention on by the financial institutions regulatory administration. Thus the research of internet finance is a great enabler and has to act as a ladder to achieve the ultimate goal of high level of our country’s financial inclusion.