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

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.

Automated summary

The banking services in China are regulated by evolving factors that are often unpredictable, facing serious risks. Many customers fail to read terms and conditions and save contract copies, leading to abuses. Application of Akim's model can increase user numbers and welfare analysis can guide insurance pricing to make it appealing. The existence of adverse selection in insurance selling by banks is detected, with estimated welfare costs quantitatively small. Further welfare assessment under policy interventions will be important for future studies.