Game Theory Analysis of Chinese DC/EP Loan and Internet Loan Models in the Context of Regulatory Goals

Abstract

The issuance of digital currency electronic payments (DC/EP), under the supervision of the People’s Bank of China, will have a certain impact on commercial banks, and will further affect the areas of internet finance and traditional financing. This paper studies the regulatory performance of DC/EP in the post-lending market under the models of internet finance and bank financing, exploring their theoretical and practical significance. Through the construction of an enterprise profit function and the regulatory utility function under the models of internet finance and bank financing, this study explores the impact of using DC/EP on the post-lending market. The study proves the following:In the absence of government regulation, internet finance platforms will increase the leverage ratio of loans, in order to obtain excess profits. The emergence of regulatory authorities and the use of DC/EP will control the leverage ratio of internet finance platforms, purify market performance, and stabilize the market order. The application of DC/EP provides a risk control method for the financial market, and coupled with government regulatory measures, it will effectively regulate the existing market order of internet finance platforms and increase the credibility of DC/EP. Therefore, the management insights obtained from this study of the application of DC/EP and the government regulation of existing financing and lending methods in the financial sector have practical significance for the current market.