Risk Spillover Effect Of Internet Finance To Traditional Financial Industry

The topics surrounding the internet finance emerge in an endless stream,and there are many opinions.Internet finance different from the securities industry as the representative of direct financing mode,it is also different from the banking industry as the representative of indirect financing mode,there are many difference with the banking,securities and insurance industry as the representative of the traditional financial industry.According to the databases,until the first half of 2017,the total of internet financial platforms in China more than 19 thousands.P2 P internet lending,Internet payment and public funding cumulative transaction amounted to 70 trillion yuan.With the rapid development of internet finance,it makes a penetration to the traditional financial industry,which will bring impact to the traditional financial industry.Many scholars research from different angles on issues related to internet finance,internet finance has gradually become the focus of researches.Under the trend of financial pattern towards diversification,the measure of risks becomes more difficult,and the prevention of risks becomes more complex.Internet finance as a combination of internet technology and finance,it has the risk characteristics of the financial industry,such as the credit risk and the liquidity risk etc.It also has the unique risks of internet technology,such as the technological risk and the operational risk etc.On the other hand,the laws for internet finance are incomplete and the supervisions for internet finance are deficient,the development road of internet finance is full of risk.By measuring the risk spillover from internet finance to traditional financial industry,clarifying the risk transmission path and internal mechanism from internet finance to traditional financial industry,and putting forward relevant suggestions according to the empirical results,it will benefit for the assessment of the internet finance,and it provides references for the sustainable development of the internet finance,it also has a positive significance to maintain the stability of the whole financial market.By referring to the related researches,many researches focuses on the impact and challenge from the internet finance to the traditional financial industry,the researches of risk spillover effect are few.We researches the risk spillover effect from internet finance to traditional financial industry is a perspective to analyze the impact from internet finance to traditional financial industry,at the same while,it is a judgement of risks infection.As for the method of measuring the risk spillover effect,many scholars try to use different methods to measure the risk spillover effect,the conditional value at risk(CoVaR)method can quantify the risk spillover value,and it is the main method of measuring the risk spillover effect.Quantile regression(QR)method is the main method for the calculation of CoVaR value,many scholars use quantile regression method combine with the CoVaR method to measure the risk spillover effect.The generalized autoregressive conditional Heteroscedastic(GARCH)model is good at analysis and prediction for volatility,therefore many scholars use the GARCH class model combine with the CoVaR method to measure the risk spillover effect.But at present,which method is better to calculate the CoVaR value has not been absolutely conclusive.The research topic of this paper is measure the risk spillover effect from internet finance to traditional financial industry.On the structural arrangements,at the first,we analyzes the various risks of internet finance will bring to the traditional financial industry at theoretically,then analyzes these risks at quantitatively,uses the quantile regression method and the GARCH class model combine with the CoVaR method to measure the risk spillover value.After we makes a comparative analysis of two different methods of measurement,and finally puts forward relevant suggestions according to the empirical results.The empirical results show that the risk spillover from the internet finance to the traditional financial industry is remarkable,at the 5% significance level,the calculated results by the two methods are the same,the risk spillover value from the internet finance to the banking industry is the largest,the insurance industry is the second and the securities industry is the least.There are lots of business dealings between the internet finance and the banking industry,coupled with the banking system P2 P network lending platform,the internet finance risks are more inclined spillover to the banking industry,the rapid development of the internet financial insurance also make spillover to the insurance industry,the relevance of the securities industry and the internet finance are weak,so the risk spillover is smaller,the empirical results are consistent with the current development situation.We makes a concrete analysis for the risk spillover effects according to the empirical results,and puts forward relevant suggestions about the sustainable development of internet finance and maintain the stability of the whole financial market.