The Impact Of Internet Finance On Financial Repression

Our country’s financial markets have been showed the characteristics of financial repression for a long time,which distorted the price of money,damaged the market efficiency,and even hinder the economic growth.With the existence of the dual-track interest rates and credit discrimination,the small and medium-sized enterprises have to face the difficulty of financing.The rapid rise of internet finance rose in 2013 challenged traditional financial institutions and broadened the financing channels for small and medium-sized enterprises and individuals.Therefore,this paper tried to study the impact of internet finance on financial repression,focusing on P2P and Yu Ebao to find theoretical basis for the development of the internet finance and provide the new idea for our country’s financial deepening.This paper constructed an index to measure the level of financial repression and studied the impact of P2P on the financial repression.The empirical results showed that with the development of P2P,small and medium-sized enterprise could solve financing problems effectively.So the financial repression in China improved much.Besides,this paper built a virtual variables based on the online time of Yu Ebao and studied the influence of Yu Ebao on the volatility of SHIBOR.Yu Ebao arbitrages between deposit and interbank market,making capital pricing truly reflect the supply and demand situation of monetary market.It helps to break the "dual-track" interest rates and promote the marketization of interest rate.Therefore,after the rise of Yu Ebao,SHIBOR market would become more market-oriented and its irrational fluctuations would decreases.In general,the development of the internet finance helped to reduce the level of financial repression in China and brought huge impact and challenge to traditional financial industry,forcing innovation and market-oriented reform of the financial system,and would continue to improve our country’s financial repression in the future.