Can Voluntary Insurance ensure risk-free digital-banking in Chinese-economy: seeking attentions?

Akim M. Rahman and Saadi Islam

Journal of Chinese Economic and Business Studies, 2022, vol. 20, issue 2, 139-158

Abstract: In today’s business-world, services are carried out in a competitive manner country-wise such as China. Banking services are no different, which has resulted digital-banking. Bank Laws regulated by Central-Bank of China are characterized by evolving many factors that are often unpredictable. It faces serious pitfalls being it riskiness. Most cases, customers don’t read terms & conditions of services. Customers don’t save contract-copy. These weaknesses cause abuses. Customer faces perceived-risk. Dealing with challenges in Chinese-economy, application of Akim’s model - Voluntary Insurance (VI) can be impetus for policy-design, which can increase number of users. Welfare Analyses are used for guidance on setting insurance-price ensuring customer’s efficiency-cost so that the VI becomes appealing to parties involved. It can lead to higher number-of-users. In scenario, bank itself is an insurance-seller, the existence of adverse-selection is detected. Here estimated welfare-cost associated with inefficient-pricing created by adverse-selection is quantitatively small; however, advantageous-selection results opposite. Welfare assessment under alternative policy intervention in Chinese-economy will be vital for future-study.

Date: 2022
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DOI: 10.1080/14765284.2021.1929792

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