Basic Finance Tutorial - Week 2

 

Chinese Economic System

· Central monetary‑fiscal system (originated in Qin Shi Huang, emperor in Qin dynasty)

· Strong mobilization, easy capital concentration

· Only imperial credit, lack of private credit

Western Economic System

· Bank‑centered decentralized checks‑and‑balances credit system (origin: Knights Templar in Eu)

· Banks and securities markets arose with commerce

· Exists private credit and a complete financial system

“Middlemen” in the Market

· Finance trades credit, invisible and intangible

· Information asymmetry is serious

· Intermediaries (central bank, commercial bank, securities) reduce asymmetry

Extension — Alibaba’s Rise & Alipay

1 Product of the Digital Era

· Economic boom, trade volume increased, market enlarged

· Started with B2B marketing; when scale saturated no need for middleman

· Taobao launched, switched to C2C

· Captured huge blue‑ocean market (C2C & B2C)

· Entrepreneurship is essentially solving problems

2 Digital Finance Created Inside the Business

· Biggest obstacle: e‑commerce infrastructure almost zero

· Serious trust/credit gap

· Western credit‑card model could not expand; Alipay as third‑party guarantor bridged trust

Escrow transaction—Taobao skyrocketed