An empirical study of the impact of third-party payments on inflation in China

Last modified: May 25, 2019
Estimated reading time: 2 min
Project Title: An empirical study of the impact of third-party payments on inflation in China
Author: Ms. Wen Shimei 
Advisor: Dr. Teerachot Phongtaveewut
Degree: Master of Business Administration
Major: Finance and Banking
Faculty: Graduate Schools
Academic year: 2018

Citation

Wen, Shimei. (2018). An empirical study of the impact of third-party payments on inflation in China. (Independent study, Master of Business Administration). Bangkok: Siam University.


Abstract

Third-party payments refers to an independent organization with a certain reputation and credit guarantee, that mainly provides services for e-commerce. For many economists, e-commerce was expected to be a crucial means of stimulating economic globalization. However, the credit system and micropayment settlement system of Chinese commercial banks have not been fully formed, and the function of third-party payments mitigate the gap to some extent. Therefore, the existence of third-party payments plays an important role in China. On one hand, third-party payment are an innovative payment method. Many studies have shown that a change in payment settlement methods and media will affect China’s monetary system, currency circulation speed, money supply, currency multiplier, degree of economic monetization, and degree of financial modernization. The nature of these factors was closely related to changes in inflation. On the other hand, the way third-party payments will stimulate consumer’s purchase decision. The change of demand will lead to a change of price. Price going up or down in a specific period is called inflation or deflation. Excessive inflation will curb the economic stability of a country and lower the level of consumption of residents. Studying the factors that influence inflation helps countries control the currency in macroscopical. The intention of this paper was to prove third-party payments had an impact on China’s inflation, by way of theoretically analyzing the effect of third-party payments on several topics, including narrow money multipliers, money supply, currency circulation speed, degree of economic monetization, degree of financial modernization, and regression analysis of third-party payments on money circulation, money supply, the degree of economic monetization, the degree of financial modernization, and the relationship of CPI (consumer price index). According to the theoretical research, third-party payments had both accelerated and decelerated impact on inflation. Currently, a great number of empirical studies had shown that the accelerated effect of third-party payments on inflation is greater than the decelerated effect. Likewise, this study was designed as an explanation research by way of defining several key factors, collecting secondary panel data and analyzing it with SPSS. The finding also showed that the role of third-party payments in China had a greater impact on inflation.

 

Keywords:  third-party payments, inflation, money suppy, CPI economic monetization, financial modernization.


An empirical study of the impact of third-party payments on inflation in China

International Master in Business Administration (IMBA), Siam University, Bangkok, Thailand

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