Research On China's Internet Financial Risks And Countermeasures

"Internet +" is the further integration of large data innovations and economic society fields,it is a brand-new form of social development in the formation of a broader Internet-based infrastructure and innovative elements.In the new round of global technological revolution and industrial transformation,the integration of large data and various fields has wide prospects and unlimited potentials and it has been becoming an unavoidable trend of the times.At the same time,these enormous benefits and potential risks are resulting in a strategic and global impaction the economic and social development of countries.In other words,the Internet is changing the whole world.The finance is also included indeed.In fact,since the moment of the Internet born,it is closely related and developed with finance.As early as 1997,the world’s leading e-commerce expert Mary Cronin had a profound description of the scene of the US banking,securities,other financial fields and the depth of integration of the Internet in her writing "Internet banking and finance".As a new financial industry,Internet finance plays a very important role in the national economy and social development.From the macroscopic perspective,the development of Internet finance is related to the security of the entire national strategy.From the general perspective,the development of Internet finance affects the whole financial system changes.From the microscopic perspective,with the popularization of the Internet,the development of Internet finance is closely related to small and medium-sized enterprises and ordinary civic public investments and financial management and even daily life.However,with the development of Internet finance,some problems are outstanding.Firstly,the nature of Internet finance is still financial.The characteristics of concealment,contagiosity,universality and unexpectation are still existed in financial risk.Secondly,Internet finance is facing serious technical security risks.Thirdly,the institutional mechanisms to prevent and to resolve the financial risks of the Internet are imperfect.Especially in China,although the government assigned the Internet financial regulatory responsibilities to the relevant departments,but the proposals and suggestions of the relevant departments specific regulatory has not been issued until now.At present,the P2P "Running away" event occurs frequently and some of the financing projects are facing "illegal fund-raising" risk and so on.In order to research these problems in depth,this paper researches the problems of China’s Internet financial risks from the perspective of institutional change and the countermeasures and suggestions to solve these problems.Compared with the financial system of developed markets in Europe and United States,China’s financial market is not mature enough.And the development of Internet finance is currently in the initial stage.Different perceptions for some problems are still existed.This paper is based on the actual situation of China’s Internet financial development,with the Internet finance and traditional financial integration,narrow sense of the Internet financial concept is becoming increasingly blurred.In fact,both the traditional financial interconnection and the financialization of Internet finance,the nature of its financial has not changed.Therefore,this study of Internet finance is the broad sense of the Internet financial concept,referring to all financing behavior through the Internet.System plays a very important role in the process of Internet financial development.And the process of the Internet finance development is also a process of institutional change.Potential profits in the new system and obstacles which is difficult to overcome in the old system are the realities of China’s Internet financial system changes.Increasing returns,higher conversion costs,organizational learning and government regulation are important reasons for the path dependence of institutional change.In the process of system changing of Internet finance,we need to be involved in the external financial systems.Banks and other traditional financial institutions are adapted to the external competition to actively upgrade,the changes of China’s financial system are caused by internal needs.And we need to promote the top financial system design and comprehensive system to promote China’s entire financial system reform and so on.For the development of Internet finance,financial theory,financial function theory,financial dislocation theory,circumvention financial innovation theory,financial suppression and financial deepening theory,Pratt&Whitney financial theory and sharing of economic theory provide a good theoretical basis.Schultz and North and other institutional change ideas for the Internet financial system changes provide a theoretical basis.The optimal path of Internet financial development is to combine the induced institutional changes with the mandatory institutional changes,and the two together to promote the healthy and stable development of Internet finance.Trial and error and adjustment,the establishment of a new discourse system and the formal system of the establishment and legalization are needed to form the induced institutional changes.The cognitive structure,the adjustment of the interests of the game,the establishment of a formal system and the legitimacy of the pressure,the relevant system and structural adjustment and repeated practice of these aspects are needed to form mandatory institutional changes.At present,China’s Internet finance is in the early stages of development and all aspects of development are immature.However,from the perspective of China’s Internet finance,we need to create a favorable environment for the development of the Internet at the same time,timely promoting the Internet banking regulation.And we can not relax on its supervision because of immaturity for Internet finance.From the practice for risk controls in United States,Britain and Germany,the more relaxed regulatory environment,standardize the industry self-discipline and improving the credit system to adapt to the Internet financial development needing of specific laws and regulations and so on are the keys to sustainable and healthy development of Internet finance.From the current practice of China’s Internet financial development,induced institutional changes led to the lack of follow-up system supply,which led to the Internet finance "brutal growth",frequent risks and other events.From the deep to analyze the problems,lack of internal control of the Internal finance and external regulation and the development of the industry are be related.Similarly,if the government implements mandatory system changes for Internet finance,there may be too strict government regulation,limited business development,damaged individual welfare damage and other issues.And we may face some problems such as the rulers of the preferences and limited rational risk,ideological rigid risk,risk of bureaucratic issues,risk of group conflict of interest and limited risk of social science knowledge.In the process of supervision of Internet finance,we must adhere to the principles of "supervision by law,appropriate supervision,classification supervision,coordinated supervision and innovation supervision".We need to give full play to the role of the market and the govenment.At the same time,we need to build China’s Internet macro-micro-prudential supervision framework.And we need to focus on strengthening regulation of the P2P network lending,third-party payment,co-financing and Internet banking and other areas.