Journal of Risk Model Validation

Internet financial risk assessment in China based on a particle swarm optimization–analytic hierarchy process and fuzzy comprehensive evaluation

Zeng Li, Wee-Yeap Lau and Elya Nabila Abdul Bahri

  • The authors assess the current risks faced by China’s internet finance and designs a risk assessment index system to assess internet finance risk.
  • The authors use the PSO-AHP method to judge the degree of all internet finance risks, combining qualitative and quantitative methods to remedy the questionnaire data’s inherent defect.
  • PSO-AHP and fuzzy comprehensive evaluation methods are found to have good applicability for internet finance risk assessment.

The combination of finance with the internet has expanded the boundaries and markets of financial services. Due to the problems of virtualization and information technology dependence, the risk management of internet finance is more complicated than that of traditional finance. Based on the identification of China’s internet financial risk, this study establishes a comprehensive evaluation system to index internet financial risk. Use of a particle swarm optimization–analytic hierarchy process (PSO-AHP) and a comprehensive fuzzy evaluation of an expert questionnaire shows that these evaluation methods are highly applicable to internet financial risk assessment. In addition, the study’s findings show credit and technical risk are very important, and that internet finance risk is high in China. Therefore, it recommends the supervision of internet financial risk in China should be strengthened, and more attention should be paid to the internet finance credit regulation and technical risk processes.

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