Why the Laissez-Faire Approach Won't Work with Internet Finance

The key to the healthy development of Internet finance is striking a balance between its expansion and regulation. There is no mature regulatory system in this field because it is a relative novelty and is different from traditional finance.

Also, the efficient market hypothesis does not work in China as far as Internet finance is concerned. The hypothesis, which assumes the rationality of all market participants, calls for a laissez-faire approach and says the regulators' job is to keep the market as efficient as it can be on its own. It argues that the market can achieve equilibrium without regulatory intervention.