From Informal Finance to Internet Finance in China

Abstract

As formal finance cannot meet financial demand and informal finance is not the most favoured institution to fill this gap, the Chinese government has started to promote internet finance or FinTech. The latter has rapidly evolved in China, and in fact has the potential to challenge both, informal and formal finance. In order to understand crowdfunding’s embeddedness in China’s FinTech sector, this chapter starts with an overview of formal and informal finance and proceeds with an analysis of FinTech evolution in China. In addition, it draws a concise picture of China’s internet industry. In particular, it first illustrates the ecosystem of China’s internet giants, exemplified by the businesses of Alibaba and Tencent. Secondly, it depicts China’s mobile internet market. Thirdly, it explains the success and challenges of China’s e-commerce market, and fourthly, it analyses China’s payments market. Eventually, China’s shift from informal to internet finance will become more plausible.