A study of the microevolution mechanism of internet finance in China from the perspective of the labour division

Abstract

This paper aims to study the micro-evolution mechanism of internet finance from the perspective of the labour division. By using the theory of circuitous production, we construct an evolution model of labour division in internet finance industry, which has a dilemma between specialised economy and transaction efficiency of two sectors. By introducing transaction efficiency and the cost of learning internet finance, we internalise the level of specialisation and relative price, to expound the mechanism of inclusive rural finance in internet finance development. Based on the data of 31 provinces in China from 2011 to 2016, this paper reveals internet finance's positive impact on rural inclusive finance by improving transaction efficiency. In terms of the field, the positive impact of internet finance on rural inclusive finance is U-shaped. Finally, we have come to the conclusion that internet finance is the most important factor to push the rural inclusive finance forward in China.