Study On Internet Financial Supernetwork Model Based On Variational Inequalities

The Internet brings stronger technology and lower cost way of implementation in payment method, information processing and expansion of the possible trade collection. On one hand, it brings threat for traditional financial intermediaries. On the other hand, it also provides opportunities for them to expand business and reduce costs, also for some Internet companies to have a chance to enter the financial field. The Internet has greatly changed traditional financial operation mode and made the financial network become increasingly complex. Internet finance of China began to sprout in the mid-1990 s. The development of Internet finance has entered a new era since 2010, which focuses on innovative financial services. Some Internet companies entered the financial field with the advantages of big data, ecommerce, mobile payment etc. A variety of new Internet financial mode have produced, including but not limited to e-commerce + credit, third-party payment, P2 P, financial Internet portal, big data finance, crowd funding etc. But after all the Internet finance is a new field. It has also brought problems in the rapid development. Therefore it is necessary to further study the Internet financial general equilibrium problems, so as to guide the macro development of the financial sector.Considering of the characteristics of Internet finance, a framework is developed for modeling, analysis and solutions to multitiered Internet financial network problems with investors, Internet financial intermediaries, traditional financial intermediaries and investees. From the perspective of cash flow, the competitive and cooperative relationships between various decision-makers are explicated, as well as their behavior and optimality conditions. Functions of credit risk and operational risk are included, considering the increasing credit risk and operational risk in the environment of Internet. In the model, the decision-makers compete within a tier and cooperate between ties to optimize the whole Internet financial supernetwork. Using the variational inequality theory, the existence and uniqueness of the equilibrium solution is studied. The governing equilibrium conditions of the Internet financial network is also given. And then, a simulation example is given by MATLAB to get the general equilibrium conditions and its dynamic characteristics of the Internet financial system to verify the validity of the supernetwork model. It shows that in the Internet financial environment, investors put more money into Internet financial intermediaries instead of traditional financial intermediaries, which puts forward higher requirements on traditional financial intermediaries.In addition, this paper introduces a social network to build another Internet financial supernetwork considering of relationship level, to study the co-evolution and emergence of integrated Internet financial networks and social networks. Increasing relationship levels in our framework are assumed to reduce transaction costs as well as risk and to have some additional value for the decision-makers. Its effectiveness is also verified by an example. It shows that relationship level has little effect for investors' decision, but it mainly influences the behavior of Internet financial intermediaries and traditional financial intermediaries. Traditional financial intermediaries can maintain the relationship between themselves with Internet financial intermediaries and investees to increase the overall amount of capital investment from Internet financial intermediaries to investees through themselves. It is more conducive to the development of the traditional financial intermediaries.