Fintech and Financial Risk in China (Contributions to Finance and Accounting)

This book provides a comprehensive overview of the development and status of fintech in China. Occupying core position in fintech development, big data takes on stronger superiority and application value. Meanwhile, blockchain and other technological innovations, which are used to serve data, greatly promote the growth of fintech industry. Furthermore, not only the benefits are illustrated by the authors, but also the financial risks and noise caused by fintech and big data are discussed. By using both academic knowledge and newest real cases in China, this timely book will appeal to practitioners, academics, and policy makers. Contents About the Authors Chapter 1: The Development of FinTech in China 1.1 Overview of FinTech in China 1.1.1 Fintech: New Technology and Financial Services 1.1.2 Differentiate Internet Finance and FinTech 1.2 Development of FinTech in China 1.2.1 Computerized Finance (1980-2000) 1.2.2 Internet Finance (2000-2015) 1.2.2.1 Models of Internet Finance Third-Party Payment Peer-to-Peer Lending Crowdfunding Consumption Finance Internet Insurance Internet Banking 1.2.2.2 Drivers of the Development of Internet Finance Misallocation Between Economic Structure and Financial Structure Strong User Base Neglect of Rivals Government Support 1.2.2.3 The Role of Big Data 1.2.2.4 Creative Destruction 1.2.2.5 Risk of FinTech 1.2.3 FinTech (2015.07 -) 1.2.3.1 Regulations Outbreak of Risk in Internet Finance Overall Regulations on Internet finance Regulations on P2P ``Regtech ́ ́ 1.2.3.2 FinTech Stage Artificial Intelligence Intelligent Risk Management Intelligent Investment Management /Robo-Advisor Intelligent Customer Service 1.2.3.3 From ``Internet Finance ́ ́ to ``Fintech ́ ́ 1.3 Summary References Chapter 2: Introduction of Big Data, the Core of Fintech 2.1 The Development of Big Data 2.2 The Third-Party Payments 2.3 The Application of Big Data 2.3.1 The Industry Distribution of Big Data Applications 2.3.2 The Examples of Big Data Applications in Finance 2.3.2.1 Big Data and Credit 2.3.2.2 Online Shopping Platform 2.3.2.3 Internet of Things (IoT) 2.4 The Ownership of Big Data 2.4.1 The Potential Problems 2.4.1.1 The Security of Individual Data Privacy 2.4.1.2 Big Data-Enabled Price Discrimination Against Existing Customers 2.4.2 The Opinions About Ownership of Big Data 2.5 The Potential Methods for Privacy Protection 2.5.1 Improve the Data Protection System and Introduce Relevant Laws 2.5.2 Data Generators Have Rights to Choose Data Disclosure 2.5.3 Technology for Privacy Protection 2.6 Summary Chapter 3: P2P Risk 3.1 Introduction of P2P 3.1.1 Definition and Overview of P2P Platforms 3.1.1.1 The Example of a Simple Intermediary: Pai Pai Dai 3.1.1.2 The Example of the Compound Intermediary: Hongling Venture Capital 3.1.1.3 The Example of Zero Revenue Platforms: Yi Nong Dai 3.1.2 Development of P2P Industry 3.2 Lending Club 3.2.1 The Development of the Lending Club 3.2.2 Business Model of Lending Club 3.2.2.1 Business Model 1:Information Intermediary: 2007.6-2007.12 3.2.2.2 Business Model 2: Semi-Bank Model: 2008.1-2008.3 3.2.2.3 Business Model 3: Securitization Model: After 2008.10 3.2.3 Regulation for P2P in the United States 3.3 E Zu Bao (``E ́ ́) 3.3.1 Business Model of E Zu Bao 3.3.2 The Scam of E Zu Bao 3.3.2.1 Fake Investment Products 3.3.2.2 Ponzi Scheme 3.3.2.3 Misuse of Investors ́ Funds 3.3.3 Lessons from E Zu Bao Fraud 3.3.3.1 Information Asymmetry 3.3.3.2 Lack of External Governance 3.3.3.3 Education for Investors 3.3.3.4 Media and Celebrity Effect 3.3.3.5 Celebrity Effect 3.4 Fan Ya (`` ́ ́) Metal Exchange 3.4.1 Background of fan Ya Metal Exchange 3.4.2 Key Features of the Exchange 3.4.2.1 Trading at a High Premium 3.4.2.2 A Contrarian Trading Mechanism 3.4.3 Business Model of ``Ri Jin Bao ́ ́ in FYME 3.4.4 The Bankruptcy 3.4.5 Lessons from Fan Ya 3.4.5.1 Irregular Operation of the Platform 3.4.5.2 The Price Premium 3.4.5.3 The Imbalance Between Metal Supply and Demand 3.4.5.4 The Media and Celebrity Effect 3.5 P2P Platforms and Other Financial Markets 3.5.1 The 2015 Stock Market Turmoil in China 3.5.2 Ren Ren Dai 3.5.3 P2P Platforms and Stock Market 3.6 Summary References Chapter 4: Development of FinTech in Academia 4.1 Introduction 4.2 Overview of the Literature in FinTech 4.3 The Literature on Big Data 4.3.1 The Definition of Big Data in Finance and Economic 4.3.2 The Effects of Big Data 4.3.3 The Methodology for Big Data 4.3.4 The Economics in Data 4.3.4.1 The Ownership of Data 4.3.4.2 Data Privacy 4.4 Blockchain and Cryptocurrencies 4.5 On-line Lending 4.6 FinTech and Traditional Finance 4.6.1 The Advantage of FinTech 4.6.2 Substitute or Complement? 4.6.3 Regulations of FinTech 4.7 Summary References Chapter 5: FinTech Technology: Blockchain 5.1 Introduction 5.2 Core Technology of Blockchain 5.2.1 Cryptography 5.2.2 Distributed Consensus on Block and Chain Database 5.3 Development of Blockchain 5.3.1 Different Stages of Development 5.3.1.1 The Stage of Digital Asset 5.3.1.2 The Stage of Smart Contract 5.3.1.3 The Stage of Intelligent Society 5.3.2 Global Development of Blockchain 5.4 The Business Application of Blockchain 5.4.1 ICO 5.4.1.1 The Definition of ICO 5.4.1.2 The Process of ICO Project Preparation: The White Paper Fund Raising Project Operation Token Circulation 5.4.1.3 The Popularity of ICO 5.4.1.4 ICO Risk The Risk of Misleading Publicity Contract Fraud Technology Risk Volatility and Risk of the Token Values Externality of ICO on Credit Risk 5.4.1.5 Global ICO Regulation 5.4.2 NFT 5.4.2.1 Introduction of NFT 5.4.2.2 Technology of NFT ERC-721 ERC-1155 ERC-998 5.4.2.3 Business Models of NFT Trading Market Profit Model 5.4.2.4 NFT and Copyright Protection 5.4.2.5 NFT Bubbles 5.5 Problems of Blockchain 5.5.1 Technology Restrictions 5.5.1.1 ``Triangular Constraints ́ ́ of Accuracy, Decentralization, and Cost-Efficiency 5.5.1.2 Information Island 5.5.1.3 The Bug for Smart Contract 5.5.1.4 Decentralization 5.5.1.5 Cryptographic Algorithm Security 5.5.2 Regulation Limitation 5.6 The Development of Blockchain in China 5.6.1 Policy Support 5.6.2 Typical Application Scenarios of Blockchain in China 5.6.2.1 Blockchain and Digital Currency The Background of Digital RMB Technical Framework of Digital RMB Prospect of Digital RMB 5.6.2.2 Blockchain and Supply Chain Finance Traditional Supply Chain Finance Blockchain Application for Supply Chain Finance Example of Supply Chain Finance 5.7 Summary References Chapter 6: FinTech and Financial Risk 6.1 Introduction of FinTech and Financial Risk 6.2 Big Data Finance and P2P Risk 6.3 The Economic Explanations of the Credit Based on Big Data 6.3.1 Background 6.3.2 Description of the Model 6.4 Some Discussion on Collateral 6.5 Takeaways References Chapter 7: Summary and Future Development 7.1 The Boundary of Data Usage 7.2 Data Ownership 7.3 The Pricing of Data 7.4 Noise in Big Data 7.5 Price Discrimination of Big Data