Research on Internet Finance Development

Abstract： This paper studies Internet finance in China from the perspective of financial function. The financial functions realized by China's Internet finance include： carrying out the basic functions of finance conveniently; completing the core functions of resource allocation with low cost and high efficiency; completing the expansion functions of risk management and risk dispersion well; and having the derivative functions of providing information， stimulating， guiding consumption and bringing social benefits.

Key words： Financial Function; Internet Finance; Development Research

1 The Main Modes of Internet Finance in China

1.1 Third Party Payment

Third-party payment is a number of independent third-party institutions that sign contracts with major banks and provide transaction support under the supervision of banks. One is the independent third-party payment mode represented by fast money， which has no guarantee function and only provides payment products and system solutions for users. The two is the third party payment mode， which is based on Alipay， which relies on its own electricity supplier website to provide guarantee function. That is， the buyer will pay the payment by using the third party platform after purchasing the goods on the e-commerce website.

1.2 P2P Loan

Peer-to-peer loans are small loans provided by individuals to other individuals through third-party platforms on the premise of collecting a certain amount of interest. The specific modes are as follows： First， the creditor's rights guarantee model represented by CreditEase， that is， the misplacement between investors and borrowers， and the package transfer between P2P enterprises， which are both debtors of investors and creditors of borrowers. Second， the project wholesale model represented by lufax， which extensively docks with banks， trusts and insurance， matches investors' funds to specific products. Thirdly， the online operation model represented by patching and lending mainly uses the Internet to carry out investment and financing propaganda and loans.

1.3 Internet Financial Portal

Internet financial portal is a platform for selling financial products and providing related services through the Internet. It generally adopts the mode of "search + price comparison" to put the products of various financial institutions on the platform. Users select appropriate financial products by comparing the prices and characteristics of various financial products.

2 The Financial Function of Internet Finance in China

2.1 Basic Functions

The basic function of finance is to provide financial services and financing functions for liquidation and settlement. Internet finance can complete the basic liquidation function of finance through third-party payment. The intermediary function of finance is to adjust between fund deficit and surplus， which can be realized by P2P loan and Internet financial portal. With the help of the Internet， P2P loans bypass banks to achieve the same adjustment between fund deficit and surplus. Internet financial portal United banking， insurance， fund and other products， will put many products on the same platform for customers to choose， through this platform， customers can quickly loan， can also buy financial products， so as to complete the financing.

2.2 Core Functions

Resource allocation refers to the choice made by comparing relatively scarce resources for various purposes. They have two advantages in resource allocation. First， the cost of resource allocation is lower. Under the Internet financial model， the information of capital supply and demand is published and matched directly on the internet. Second， the efficiency of resource allocation is higher. Internet financial business is mainly handled by computers. The operation process is completely standardized. Customers do not have to wait in line， business processing speed is faster.

3. China's Internet Finance Development Strategy

3.1 Constructing a Supervision Model Suitable for Internet Finance

China's emerging regulatory model for Internet finance should be： The combination of industry self-discipline and market elimination under legal deterrence. Perfecting the law is the premise to deter Internet finance from touching the legal red line. In order to guide the development of Internet finance， the government should give the Internet Financial Association established in early 2014 certain authority， so that it can have some incentives to Internet financial enterprises， and encourage them to abide by the law.

3.2 Guiding the complementary development of Internet Finance and traditional banks

Internet finance has inherent deficiencies in the function of economic regulation. From the perspective of financial development， there must be a complementary relationship between Internet finance and traditional banks. The deficiency of the function of Internet financial economic regulation is compensated by the advantages of the important channel of economic regulation of traditional banks. To this end， the government can encourage the two to complement each other in the way of exchange of interests.

作者簡介：何成瀚 男 19970319。漢 本科 北京工商大學嘉華學院