经济学英语论文

Development Analysis Between the Internet

Finance and the Traditional Banking

Take the Competition Between the Balance of Treasure and the Traditional Banking for

Example

Zhenxue Zhang

11232, 1123217, Information Management and Information System, Northeastern University at Qinhuangdao. 066004

No.143, Taishan Road, Qinhuangdao, Hebei Province, China

Abstract

Although

the

Internet

Finance

has

just

sprung

up

in

recent

years

and

it

has

being

presenting

a

rapid

development.

And

now

the

Internet Finance forms a pattern of a kind of competition with the

traditional

banking.

Out

of

the

basic

characteristics

of

economic

man analysis, Nash equilibrium result of the Internet Finance and

the

traditional

banking

shows

that:

for

the

traditional

banking,

This

paper

from

the

different

angles

to

do

the

respective

factor

analysis on the Internet Finance and the traditional banking, and on

the basic of the special advantage analysis of the Internet finance

to

put

forward

policy

suggestions.

The

search

result

help

us

to

know the importance of the change more deeply and make both the

Internet

Finance

or

the

traditional

banking

are

able

to

do

better

service to the public.

Keywords

The

Internet

Finance;

The

Traditional

Banking;

Competition;

Development

Background

Nowadays the Internet Finance gradually goes into people

’

s

vision

and

has

a

rapid

development

in

today’s

financial

system. It

’

s the combination of traditional financial industry

with spirit of the Internet in the emerging field. The spirit of

the

Internet

“

Open,

equality,

cooperation,

share

”

are

permeating

the

traditional

financial

industry.

As

long-term

monopoly

under

the

protection

of

the

traditional

banking,

the short-term impact brought about by the Internet Finance

is

inevitable

and

not

allow

to

ignore.

So

what

the

development

of

the

Internet

Finance

and

the

traditional

banking will stage and what reaction the traditional banking

will have under the impact of the Internet Finance? The first

step

to

explore

this

problem

is

the

market

entrance

game

between the Internet Finance and the traditional banking.

I

NTRODUCTION

In the modern economy, the traditional banking has been a

kind

of

special

enterprise.

The

traditional

banking

mainly

through absorb deposits and let out loans, collect the interest

margin

for

profit.

Because

our

country's

current

economic

system is to restrict the free flow of capital and the relatively

closed economy,which makes our country's floating interest

rate and market demand not related too much, so the regular

savings

rate

and

loan

interest

rate

stipulated

by

the

state.

Based

on

the

special

system

of

interest

rate

to

a

certain

P

ROFESSIONAL

E

NGLISH

-FINAL

PAPER

extent,

contributed

to

the

traditional

bank

profits

is

far

higher than other industries.

With its unique legal reserve system,the traditional banking

has

a

strong

ability

of

credit.

But

the

appearance

of

the

Internet

Finance

is

becoming

a

threat

to

the

traditional

banking,the

development

of

emerging

information

technology

such

as

the

Internet

makes

the

necessity

of

the

financial

intermediaries

is

greatly

reduced

its

main

competition in the field of finance.

The

information

asymmetry

is

the

biggest

problems

financing

faced

with,

how

to

use

low

cost

to

complete

to

perfect information and accurate the price is the key of the

development of financial business, and the Internet Finance

in

this

aspect

with

the

help

of

a

strong

customer

flow,

efficient

and

convenient

fast

payment

means

make

it

have

obvious

advantages.

Its

main

profit

model

is

cooperating

with

the

fund

department,

with

higher

than

the

traditional

banking current interest rates to absorb social idle funds to

the real economic investment for greater return and thus to

obtain the profit gap from the difference.

For

example,

in

June

2013

the

Alibaba

Corporation

company and the Celestica fund management company push

off

balance

of

treasure

jointly,

the

scale

of

its

assets

is

exceeding

more

than

10

billion

yuan

in

just

a

month,After

the

launch

of

the

balance

of

treasure,

not

only

can

strengthen

the

market

recognition,

but

also

can

break

the

management

pattern

of

financial

markets,

because

it

can

bring

to

the

customers

the

more

interests

higher

than

the

bank's

standard

rates .

Once

with

the

development

of

the

similar

the

Internet

Finance,

it

will

bring

to

the

present

financial

markets

a

larger

impact.

There

are

a

lot

of

emerging

literature

searched

on

the

Internet

Finance

and

traditional banking, but from the perspective of game theory

to study the relationship between the Internet Finance

with

the

traditional

banking

are

not

many.

This

article

from

the

perspective

of

game

theory

to

explore

the

questions

when

the

Internet

Finance

and

the

traditional

banking

pursuit

of

their

own

to

choose

comprehensive

benefit

maximization

and the attitude of the tendency.

Simple Review of the Internet Finance and Traditional

Banking

About

the

study

of

the

relationship

between

the

Internet

financial

and

the

traditional

banking,

domestic

and

foreign

scholars have a lot of discussions.

1

Some

scholars

from

the

perspective

of

risk

analysis

of

Internet financial problems and

the influence on traditional

banking,

the

result

is

that

the

Internet

financial

industry's

rapid expansion make the commercial banks under pressure,

the expansion of financial business innovation speed too fast

but there is no rules to follow, it is often free from the China

banking

regulatory

commission

and

the

central

bank

regulation,

and

coupled

with

the

openness

of

the

Internet,

the potential risk should not be ignored.

And

some

scholars

from

the

perspective

of

the

Internet

Finance

and

traditional

banking

win-win

believe

that

the

future of our country banking industry will be more to learn

from

the

advantages

of

the

Internet

financial

development

strategy

and

then

gradually

adjust

their

own

development

strategy

and

realize

development

transformation.

At

the

same

time,

the

Internet

financial

will

refine

their

business

areas and avoid the weakness of business what itself unable

to overcome.

From both the

mutual influence and reference, cooperation

is an irresistible trend to both of the Internet Finance and the

traditional banking. The situation that they divided against is

temporary.

There

also

have

the

point

from

the

perspective

of

the

Internet financial impact on the traditional bank, and believe

that under the Internet Finance’s shock, the development of

the traditional banking after a long time will cause the bank

customer

churn,

and

each

business

will

have

shrink

phenomenon,

the

traditional

management

mode

reform

is

imminent.

But

because

the

Internet

Finance

itself

there

are

many

problems

at

present,

as

well

as

the

traditional

bank

in

the

process of long-term development is in a important position.

So that the relationship to both is hard to say.

Throughout

most

of

the

scholars’

study

we

found

they

are

mainly

from

the

theory

angle

to

analyze

the

relations

between

the

Internet

Finance

and

the

traditional

banking,

and

less

from

the

empirical

perspective

to

explore.

This

article from the perspective of game theory analysis of game

strategic

choice

between

the

Internet

Finance

with

the

traditional banking, and on the basis of the optimal strategy

of

the

Internet

Financial

and

the

traditional

banking

to

analyse and put forward some policy suggestions about this.

Special Advantage Analysis of the Internet Finance

1) Efficient and Convenient 3A Self-service

The basic strategy of the Internet Finan

ce’s

operation is

dealing

the

business

front

and

background

with

data

processing

integration.

As

well

as

it

can

provide

the

bank

customers

for

convenient

and

flexible

services

available at any time, any place, and by any way, namely

called

Anytime,

Anywhere,

Anystyle

of

3A

services.

And

now

the

advanced

computer

system

of

Internet

financial

institutions

can

treat

a

large

number

of

bank

business

for

centralized

processing

simultaneously.

So

can

avoid

or

reduce

the

inefficient

factors

that

the

traditional

banking

unable

to

overcome,such

as

the

chronological queuing, repeat communication. Then the

customer business can be deal with more efficiently.

2) Average Cost is Low and Continues to Decline

For the construction of Internet Finance

is fixed, and does not need to pay a lot of daily expenses.

As it can be seen from the Fig 1, each new business

’s

(or

each

new

customer

’s

)

marginal

cost

(MC)

is

almost

negligible,

making

every

business

average

cost

(AC)

with

the

increase

of

business

keep

decreasing,

the

total

cost curve (TC) is growing very slowly. Therefore, after

the

use

of

the

Internet

Finance

model

reaches

a

certain

size relative to the traditional banking, its cost advantage

will continuously enhance obviously. As shown in Fig 1.

FIG. 1 COST ANALYSIS FUNCTION

3)

To the Customer the Lock in Effect is Stronger

The

learning

cost

of

familiar

with

an

Internet

financial

system

is

very

high,

some

customers

also

buy

a

digital

certificate

for

the

requirement

of

security

like

the

high

cost

of

durable

physical

device.

When

the

“Switching

Cost” of

the customer reach to a certain extent will have

a

in

effect

This

effect

makes

the

capability

of

innovation

of

the

bank

on

the

net

to

get

some

award

Even

in

the

case

of

difficult

to

obtain

patent

protection,

compared

with

the

traditional

bank

of

most

products, It also won't produce excessive competition.

4)

Good

for

Brand

Image

and

the

Establishment

of

Quality Standard

The

Internet

financial

model

’s

graphical

interface

interaction

with

customers

for

a

long

time

to

show

customers

CI

(Corporate

Identity

System)

image

with

the opportunity fully, and provide more services than the

business branches more standard and more specification.

It

avoided

the

different

service

satisfaction

brought

by

the staff due to the staff's service quality high or low and

staff’s

sentiment

and

can

avoid

a

large

number

of

uncontrollable

factors

on

quality

of

work

in

the

traditional banking.

The Challenge of the Internet Finance to the Traditional

Banking

Due to the rapid development of the Internet technology and

the

increasing

influence

to

People's

Daily

life,

the

Internet

finance rapid rise. And by the time, because of its operation

and

cost

advantage,

it

brought

violent

impact

to

the

traditional

banking.

Especially

in

recent

years,

the

Internet

finance has begun to gradually erode of the traditional core

2

Development Analysis

B

ETWEEN THE

I

NTERNET

F

INANCE AND THE

T

RADITIONAL

B

ANKING