China’s Internet Money Market Fund’s Mode Innovation And Quantitative Analysis Research Of Risk

Based on the theory of money market funds at home and abroad, and the research of Internet finance, this paper analyzes China’s Internet Money Market Fund’s increasing risk during the innovation of channel and technology, and compares with the Traditional Money Market Fund. Through Using ARMA model and GARCH model fitting the yield sequence of the sample funds, the empirical analysis proves the existed risk difference between Internet Money Market Fund and Traditional Money Market Fund, and reveals the risk characteristics, aiming at improving investors’ cognition of its operating model, strengthening awareness of investment risks, and putting forward suggestions for the management of the regulatory policy, to promote the healthy development of the Internet finance.The Internet Money Market Fund is actually an organic integration of the fund company, the electronic business platform, the third-party payment mechanism and computer technical supporting system, developing a series of innovative features, including daily revenue distribution, "T+0" redemption mechanism, network synergies, etc. At the same time, mode innovation derives absence of regulation, information asymmetry risks, operational risks and network security risks, liquidity risk, and some other special risks. The empirical analysis proves the existed risk difference between Internet Money Market Fund and Traditional Money Market Fund, and reveals the risk characteristics:Internet Money Market Fund has higher yield and less risk than the Traditional Money Market Fund, but its future yield is harder to predict. The two kinds of funds both have fat-tailedness and volatility clustering of return, but Internet Money Market Fund still has volatility persistence, and Traditional Money Market Fund exists asymmetry.This paper is divided into four parts. The introduction part based on the problem background, research significance and literature review, provides a theoretical foundation and a research method for further study. The second part defines the nature of Internet Money Market Fund, studies the innovative development model and characteristics, discusses the positive effect on Chinese financial market, and special risks derived by mode innovation. Through the analysis of the basic statistical characteristics, tests of normal distribution, stationary and autoregressive conditional heteroscedasticity, the third part reveals the different characteristics between the two kinds of funds, selecting the suitable ARMA model or GARCH model to fit sequence yields fluctuations. The analysis of the models could judge predicting ability and come to the conclusion. The last part summarizes research achievements, provides reference suggestions for investors, fund companies and regulators, and then develops the deficiency of this paper in the future.