Internet a shot in the arm for financing
Updated: 2014-04-18 07:13
By Luo Mingxiong (China Daily)
|
|||||||||||
The rise of Internet financing has eaten into the savings of traditional banking giants. According to official data released on April 15, the savings of four State-owned banks dropped by 1.9 trillion yuan ($305.41 billion) in the first two weeks of April.
The development of the Internet has provided better information for market players. And since the Internet and the financing business both need information to run their systems, they can work in tandem.
Statistics show that in 2013, China's M2 was 103 trillion yuan ($16.58 trillion) against its GDP of 56 trillion yuan. But small and middle-sized enterprises which accounted for 70 percent of the total jobs in the country could only get less than 20 percent of the total loans issued by financial institutions. This shows that China's banking system is distorted, with the price of money not representative of its true value. This is where Internet financing can play a vital role, because it can fulfill traditional financing functions as well as create a financial world in which more people can do business.
Since the Internet has been attracting more users and capital by facilitating more and faster transactions, it can help better allocate resources through new modes of peer-to-peer lending and "mass funding", which have already attracted many investors. Besides, people can easily use the Internet to search for and compare various financial products - some new websites have already been designed to act like a financial supermarket to allow investors to choose their products (or investment vehicles). Internet financing also helps users diversify risks by providing a huge volume of data. An apt example of how a company or individual can minimize (or diversify) risks is Alibaba, whose petty loan lending - based on small businesses' daily performance - has crossed 170 billion yuan.
Internet financing can also create a new financial world. It has already broken the traditional segmentation of space and time, prompting more people to do business.
One of its leading applications is Yu'ebao; its users who have Alipay can gain daily interest on their deposits from a money market fund launched in June last year. Not only is the minimum required investment of just 1 yuan convenient for small investors, but also its annual yield of about 6 percent is much higher than the central bank's benchmark rate of return of 0.35 percent. No wonder, it has collected more than 500 billion yuan from over 81 million investors.
Related Stories
Internet financing boom 2014-04-10 08:34
Internet finance shaking up Chinese banks 2014-04-03 09:02
Internet finance can breathe new life into market 2014-03-29 11:20
No need for China to copy US model in Internet finance 2014-03-21 14:22
Today's Top News
China's next 5-year plan eyes deepening reforms
Li says economy can continue growth
Quality of arable land 'worrying'
Families praying for a miracle
US says Ukraine not on brink of civil war
An accident waiting to happen
Hundreds missing after ferry sinks
British minister urges Scotland to remain in Britain
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Beijing integrates with Tianjin, Hebei |
Enemies share eternity together |
Expats flee big, smoggy cities |
Life after an only child dies |
Parents put kindergartens to the test |
White Crane dance takes flight |