The Impact of Internet Finance on China’s Residents’ Consumption

In recent years, China's economic development has slowed down and is in a critical period of transforming its economic structure. China's development plays an important role in promoting sustainable economic development. Therefore, the importance of expanding domestic demand should not be ignored. The emergence and development of Internet Finance fill the gap in some aspects of traditional finance, making the level of financial model more abundant. Even in the current downward economic growth, it still promotes the sustained growth of household consumption. This paper tries to analyze the impact of Internet Finance on residents' consumption from a more comprehensive perspective by combining theory with empirical research. Firstly, the author summarizes the current situation of Internet finance development through analysis. Thereafter, the author studies the influence mechanism of Internet Finance on residents' consumption from the perspectives of the increase and decrease of residents' consumption demand, the influence of consumption psychology and the change of consumption mode. On the basis of the above analysis of the current situation and related theories, this paper conducts a quantitative test and empirical analysis of the relationship between household consumption and the development of Internet finance in different provinces of China from the first quarter of 2014 to the first quarter of 2016. Using the panel data model and linear regression analysis method, this paper draws the conclusion that the healthy development of Internet finance will positively affect residents' consumption. Finally, based on the relevant conclusions of this study, the author gives policy recommendations for possible problems and risks, in order to better promote the sustainable development of Internet finance and the rapid growth of consumer spending. Keywords—Internet finance; Consumption; Impact mechanism I. RESEARCH BACKGROUND AND SIGNIFICANCE A. Research background New concepts such as e-commerce and mobile payment have gradually become close to people's lives. Internet finance has also emerged, such as third-party payment, crowdfunding and other emerging Internet financial models due to their transaction costs. The low price has a strong impact on the traditional financial model represented by state-owned commercial banks, and it also provides an opportunity for innovation in its business. At the same time, traditional consumption habits and intrinsic consumption patterns have also undergone tremendous changes due to the development and rise of Internet finance. The popularity of the Internet in China is very high. As shown in Figure 1.1, the scale of Internet users in China continues to grow rapidly. As of December 2017, China has already owned 772 million Internet users, and in 2017 alone, it has acquired 40.74 million new ones. Increasing netizens, such a huge market has undoubtedly provided a fertile ground for the development of Internet finance. Many large Internet finance companies have also been born in this context, and many traditional companies use Internet technology to reform and innovate. These new business models are the product of the Internet age, and also profoundly affect the lives of residents, especially consumption. The development of Internet finance has driven the growth of household consumption, which has become a hot spot of social concern. B. Research significance The rapid development of the Internet has made the traditional financial industry feel the impact and pressure, and the ordinary residents have experienced changes in consumption habits and consumption patterns. The impact mechanism t is in line with the hotspots of China's high-speed development period, and broadens the research on consumer finance-related fields. In the existing research on Internet finance, it is not common to study its impact on consumption. Today, the popularity of new consumption methods such as Jingdong white strips and ant flower buds, Taobao, Tmall, Vipshop, Jingdong, etc. have become a new world for residents to shop, reflecting the new characteristics of today's residents' consumption, hungry, US group takeaways, etc. The promotion of take-out APP reflects the impact of mobile payments on residents' lives. Internet finance has significantly affected people's lives and promoted the consumption of the masses and the growth of domestic demand. This research has important practical significance. II. LITERATURE REVIEW A. Research on the development of internet finance For Internet finance, some scholars believe that from the perspective of its essential attributes, it reduces the cost of transactions and improves the efficiency of resource utilization[1]. It is a direct and indirect financing method different from traditional finance and has great social value[2]. Internet finance has made up for the shortcomings of the traditional financial model, and it has also adapted to the development of market demand, which is also an important reason for its rise and rapid development[3]. Internet finance can be seen as an unprecedented financial model[4], and its advantages, in addition to driving the innovation of traditional financial models, also provide a new type of financing Advances in Social Science, Education and Humanities Research, volume 385 3rd International Conference on Education, Economics and Management Research (ICEEMR 2019) Copyright © 2019 The Authors. Published by Atlantis Press SARL. This is an open access article distributed under the CC BY-NC 4.0 license (http://creativecommons.org/licenses/by-nc/4.0/). 515 channels, especially for small and medium-sized enterprises, traditional formal financing channels often have higher requirements for corporate financing[5]. These have formed a hindrance to the financing of small and medium-sized enterprises, and Internet finance can help small and medium-sized enterprises to solve this problem[6]. At the same time, a scholar also believes that Internet finance can help small and medium-sized enterprises improve their financing efficiency[7], because the financing threshold through Internet finance is relatively low, and transaction information is relatively open and transparent, so that funds can be effectively utilized[8]. Therefore, many scholars have proposed that we should pay attention to the supervision of Internet finance and introduce relevant policies to reduce its adverse impact on social and economic development[9-10]. Xie Equality proposed to strengthen supervision from various aspects such as supervision subject, fund custody and information disclosure[2]. In summary, Internet finance, as an unprecedented financial model, closely follows the times and complements the traditional financial industry[11]. However, rapid development is often accompanied by many problems. Internet finance is no exception, so it needs to be effective[12]. The supervision and improvement of the Internet financial service system make Internet finance better serve society and the public[13]. B. Research on Internet Finance and Changes in Household Consumption As the ultimate goal of production, the role of consumption cannot be ignored for the national macro economy[14]. Paying attention to saving is a habit that our residents have always had. Most of the residents in China are mainly conservative consumption[15]. In the context of the rapid development of the Internet, Chinese residents have also begun to change the psychology of consumption, and habits have also changed[8]. However, traditional consumption habits cannot be easily changed by income growth alone. The growth of consumption and the change of consumption habits need to be driven by new consumption patterns, giving new incentives for residents to consume[11]. The role of consumption is self-evident, and the development of Internet finance is profoundly affecting household consumption. Internet finance can’t only improve the efficiency of financing, but also play an important role in stimulating the vitality of the consumer economy[16]. Internet finance stimulates consumption growth, which in turn drives the development of the real economy, especially the development of third-party payment, which largely affects household consumption [10]. In addition, the growth of online consumption has also benefited from the development of Internet finance. In the context of Internet finance, the third party payment system can save time and cost of transactions, make up for the drawbacks of traditional transactions, and greatly improve macroeconomic benefits[1]. At present, Alipay, which is deeply in our lives, is a typical example of third-party payment by Internet finance. Its emergence means that Internet finance will have a huge impact on residents' consumption patterns and consumption habits in the future[17]. At present, there are few studies on the relationship between Internet finance development and household consumption, but the research on Internet finance and household consumption is of great significance[1]. By combing the status quo of Internet finance and consumption, analyzing the impact mechanism of Internet finance on household consumption, it is helpful to use consumption to stimulate domestic demand and promote the sound development of the economy[16]. III. STATUS OF CHINA'S INTERNET FINANCE AND CONSUMPTION DEVELOPMENT There are different classifications for the development of Internet finance. According to its definition, the classification of the mainstream academic methods is rough as follows. 1) Third-party payment As a kind of online payment mode, third-party payment is provided by an independent organization. Generally speaking, such independent institutions have strong strength and good reputation guarantee capability. The organization directly signs contracts with banks through online trading platforms. In the background, docking with the bank's payment settlement system (Liu Xiaolin, Xu Chang