Abstract
Since the beginning of 21st century, internet finance, which facilitates fund transfer, monetary circulation and intermediation via internet, has been developing rapidly with the wide use of internet technology and mobile devices. Internet finance contributes to the availability of the financing to micro and small enterprises, the optimal allocation of financial resource, and promotes the inclusiveness of the financial system. Following the deregulation of China's internet finance, the sector has grown rapidly since 2013. Interest rate liberalization and reforms occurred around the same time. However, there remain substantial gaps in regulatory oversight of both banks and internet finance. Financial innovation can lead to new financial institutions and challenges, as has been documented in the FinTech of movement, in United States. Similar trends apply in China. This paper analyzes the development of China's internet finance in recent years. It also examines the major practice of internet finance in China, such as Internet payment (Third-party payment service: Alipay), Internet-Based Mutual Fund Sale (Yuebao), P2P online lending, and so forth. Furthermore this paper examines the direction of regulatory oversight of internet financing in China in light of the country's social realities and characteristics of its development. At present the development of internet finance in China is still at a nascent stage. It is critical to protect the legitimate rights and interests of consumers and mitigate risks while encouraging innovation. Relevant authorities should exercise prudential oversight on internet finance, and at the same time promote it to grow in a sustainable, healthy and stable way so as to better serve the real economy.
