Internet Financial Risk And Control Research

In the 21 st century,Internet finance has completely changed our habits in daily life and brings us more convenience.In 2013,with the appearance of Yuebao,Internet finance has boosted its development and gained explosive growth.Internet finance has greatly improved the efficiency of resource allocation,reduced transaction costs and the difficulty for public to enter financial sector.It has realized the wealth of balance funds.Public are beneficial from the effect of financial wealth.Internet finance is the great supplement for financial industry.At the same time,there exist many security risks in Internet finance,such as credit risk,market risk,liquidity risk,human operation risk and information technology security risk.Internet finance has expanded the boundaries of traditional financial industry,provided financing opportunities for small and micro enterprises and long-tailed customer groups that can’t enjoy services from the traditional financial industry.On the one hand,with insufficient risk awareness and low risk tolerance,long-tailed customer groups lack financial knowledge and completely believe in financial institutions’ implicit promise of rigid payment.On the other hand,the rapid development of Internet finance industry in China has benefited from the regulatory gap.Unclear responsibilities in Internet finance indicate that necessary supervision is needed.According to Cannikin Law,the amount of water that the barrel can hold is decided by the shortest piece of wooden barrel.Similarly,the risk control of Internet finance is the weakest section.It’s crucial for Internet finance to gain sustainable development and maintain financial system’s security and stability.This paper discusses the connotation,types and characteristics of internet financial risks,it also studies the effect of Internet financial risks on economic,social and government.The analysis focuses on technology risks,reputation risks and market risks in Internet finance.Specifically,the technical risk is mainly analyzed from two aspects:the characteristics of technology application risk and network information security risk.The reputation risk concentrates on credit risk,human operation risk and reputation risk in company operations.And the market risk emphasizes liquidity risk,internet money laundering risk,laws and regulations risk.Finally,this paper also describes the experience of the U.S.Internet financial risk control,make summary of practices fromthe U.S.Internet financial companies,the investors and the government department.Based on that,propose suggestions for strengthening China’s internet financial risk control.